Dangote oil refinery is rapidly increasing its gasoil exports to West Africa, capturing market share from European refiners, according to traders and shipping data.
Reuters reported that the $20 billion refinery is currently producing a lower grade of gasoil than expected as it awaits the restart of units necessary for producing cleaner fuels. As a result, the refinery is seeking buyers in neighboring markets.
In May, the refinery’s gasoil exports reached nearly 100,000 barrels per day (bpd), almost doubling April’s levels, according to data from analytics firm Kpler. Most of these exports were directed to other West African countries, with one shipment sent to Spain.
However, preliminary data for June shows a significant drop in gasoil volumes, although overall oil product exports, including fuel oil, naphtha, and jet fuel, remained relatively high at 225,000 bpd.
“The refinery has shifted the balance in West Africa,” impacting European markets, a European distillates trading source told Reuters. Kpler data revealed that EU and UK gasoil exports to West Africa fell to a four-year low of 29,000 bpd in May, while Russian exports to the region dropped to an eight-month low of 87,000 bpd in the same month.
Dangote has been selling some high-sulphur gasoil in the Nigerian market, leading to a dispute with local fuel retailers over who is responsible for selling the dirtier fuel.
The Petroleum Industry Bill passed in 2021 mandated a sulphur content of 50 parts per million (ppm) to align with the sub-regional ECOWAS standards adopted in 2020.
However, the regulator permitted the sale of gasoil with sulphur content above 200 ppm locally from the beginning of the year until June, allowing local refineries and importers more time to comply with the new standard.
As European countries, including major hubs like Belgium and the Netherlands, tighten regulations on high-sulphur gasoil exports, cargoes from the Dangote refinery have found markets in regions with more lenient motor fuel standards.
Earlier in May, the Chairman of the Dangote refinery, Aliko Dangote, stated that when fully completed, the refinery will supply products to West and Central African countries as its capacity is too big for Nigeria alone.
This decline in gasoil exports from Europe to West Africa confirms earlier reports by Reuters, which stated that the refinery has the potential to reduce the $17 billion in oil imports into the continent and even lead to the closure of some European refineries.
In 2023, West Africa became the largest regional recipient of Europe’s gasoline exports, receiving roughly one-third of the continent’s average exports, which totaled 1.33 million barrels per day (bpd).
