The Organization of Petroleum Exporting Countries (OPEC) has highlighted the significant impact that Nigeria’s Dangote Refinery is expected to have on Europe’s oil and gas market, particularly the Northwest Europe (NWE) gasoil sector. In its June 2024 Oil Market Report, OPEC listed the Dangote Refinery as one of the key suppliers of diesel and jet fuel that could disrupt Europe’s energy industry, a development projected to benefit Nigeria’s economy.
Thank you for reading this post, don't forget to subscribe!The $20 billion Dangote Refinery, recognized as the world’s largest single-train refinery, began operations in January and has already started influencing global crude flows. Experts predict that as the refinery ramps up to full capacity, it will continue to pressure NWE gasoil performance, especially with additional supplies coming from the Middle East and Mexico’s Olmeca refinery.
Europe, one of the largest consumers of refined petroleum products, has increasingly relied on imports from Asia and the US after the EU banned Russian diesel. The 650,000 barrels per day (bpd) capacity Dangote Refinery is now positioning itself as a significant supplier to the European market, following a reduction in crude oil supplies from International Oil Companies.
Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries Limited, revealed that the refinery has already exported its first jet fuel cargo to Europe and has exported 90% of its 3.5 billion liters of jet fuel and diesel production. This move comes amid limited support from the Nigerian government, prompting the refinery to target international markets.
BP has already begun transporting jet fuel from Dangote to Rotterdam, following a successful tender in May. OPEC noted that while the jet/kerosene crack spread in Rotterdam showed a slight decline in June due to supply-side dynamics, demand from the aviation sector is expected to rise, potentially increasing pressure on the European market.
In its initial months of operation, the Dangote Refinery scaled up to 400,000 bpd, delivering a range of products including diesel, jet fuel, naphtha, and fuel oil to both domestic and international markets. The refinery is also set to begin gasoline production, Nigeria’s primary fuel type, by mid-August.
The refinery’s operations have already disrupted traditional crude flows, with significant quantities of Nigerian crude now being processed domestically rather than exported. The refinery has also started using US WTI Midland crude as a supplement, which has affected the light, sweet crude market in Europe.
Aliko Dangote, President of Dangote Group, emphasized the refinery’s goal to process Nigerian crude and add value within Nigeria. However, he noted that the facility remains open to sourcing feedstock from other countries, including Libya, Angola, and Brazil, to enhance its operations.
Nigeria, Sub-Saharan Africa’s largest oil producer, pumped 1.5 million bpd in June 2024, with the Dangote Refinery now playing a critical role in refining a significant portion of this output domestically.
