Nigeria's Dangote refinery expands gasoil exports in West Africa

Nigeria's newly established Dangote oil refinery has begun increasing its gasoil exports to the West African market, consequently reducing the market share held by European refiners, as per data from traders and shipping records.

The $20 billion refinery, constructed by Africa's wealthiest individual, Aliko Dangote, near Lagos, has been producing a lower quality of gasoil than initially anticipated. This is due to awaiting the recommissioning of certain units needed for the production of cleaner fuels. As a result, the refinery is targeting buyers in neighboring West African markets.

Data from analytics firm Kpler revealed that gasoil exports from the refinery surged to almost 100,000 barrels per day (bpd) in May, nearly twice the amount exported in April. Most of these exports were directed to other West African nations, with one shipment reaching Spain.

Preliminary figures for June indicate a significant drop in gasoil volumes, though overall oil product exports, including fuel oil, naphtha, and jet fuel, remained high at 225,000 bpd.

"The refinery has altered the supply dynamics in West Africa, impacting European markets as a consequence," commented a European distillates trading source.

Data from Kpler also showed that EU and UK gasoil exports to West Africa hit a four-year low of 29,000 bpd in May, while Russian exports to the region decreased to an eight-month low of 87,000 bpd.

Locally, Dangote has been selling some high-sulphur gasoil in Nigeria. However, there is an ongoing dispute with local fuel retailers regarding the sale of higher-pollution fuels.

Nigeria’s 2021 oil legislation mandates a maximum of 50 parts per million (ppm) sulphur content, in line with the ECOWAS standards adopted in 2020. Nevertheless, the regulator had permitted the sale of gasoil with sulphur content above 200 ppm until June to give local refineries and importers more time to meet the new standard.

As European nations, including key hubs like Belgium and the Netherlands, tighten regulations on high-sulphur gasoil exports, shipments from the Dangote refinery are finding markets in regions with less stringent fuel standards.