Dangote Refinery to Shake Up European Oil Market, Says OPEC
By Patience Ikpeme
The Dangote Refinery is poised to disrupt the European oil market, according to the Organization of Petroleum Exporting Countries (OPEC).
The world’s largest single-train refinery, located in Nigeria, is set to increase pressure on Northwest Europe (NWE) gasoil, a key product in the region.
OPEC’s June 2024 Oil Market Report highlighted the refinery as a major supplier of diesel and jet fuel, capable of significantly impacting Europe’s oil and gas industry. This development is expected to have positive repercussions for the Nigerian economy.
The report underscores the potential of higher production levels from the Dangote refinery, coupled with increased supply from the Middle East and Mexico’s Olmeca refinery, to exert pressure on NWE gasoil prices in the medium term. Europe, a major importer of refined petroleum products, has relied heavily on imports from Asia and the United States since the ban on Russian diesel.
Despite facing challenges in securing local crude supply, the refinery, owned by Africa’s richest man, Aliko Dangote, has already made significant strides. It has successfully exported its first jet fuel cargo to Europe and aims to capture a larger share of the European market.
According to Vice President of Oil and Gas at Dangote Industries Limited, Devakumar Edwin, 90 percent of the refinery’s initial production, amounting to 3.5 billion liters, has been exported to Europe. This aggressive export strategy is attributed to alleged insufficient support from the Nigerian government.
The refinery’s impact on crude oil flows is also evident. The increased demand for light, sweet crude has led to a surge in imports of WTI Midland from the United States. This shift could tighten the global market for this type of crude.
While the refinery has primarily focused on diesel, jet fuel, naphtha, and fuel oil in its initial phase, gasoline production is expected to commence in mid-August.
Dangote Group President, Aliko Dangote, has expressed the company’s intention to diversify its crude oil sources to include Libya, Angola, and Brazil. However, he emphasized the importance of utilizing Nigerian crude to create value within the country.
Industry experts believe the Dangote Refinery’s capacity to process a range of light and medium crude grades positions it well to compete in the global market.
Nigeria, as sub-Saharan Africa’s largest oil producer, stands to benefit significantly from the refinery’s success. The project marks a major milestone in the country’s efforts to add value to its oil resources and reduce dependence on imported refined products.
