The Organisation of Petroleum Exporting Countries (OPEC) has highlighted the potential impact of the Dangote Refinery, located in Nigeria, on Europe’s oil industry. According to OPEC’s June 2024 Oil Market Report, the refinery’s operations are expected to influence the performance of Northwest Europe’s (NWE) gasoil market significantly.
The Dangote Refinery, the world’s largest single-train facility, is listed by OPEC as a key player likely to disrupt Europe’s oil and gas sector. This forecast follows earlier predictions by Standard & Poor’s Global, which noted that the $20 billion refinery would alter international crude flows upon reaching full capacity. Since its startup in January, the refinery has already begun making its mark, according to trading sources and ship tracking data.
The OPEC report points out that increased production from the Dangote Refinery, along with strong supply from the Middle East and the new Mexican Olmeca refinery, will likely exert pressure on NWE gasoil in the mid-term. Europe, a major purchaser of refined petroleum products, has relied on imports from Asia and the US since the European Union banned Russian diesel. The 650,000 barrels per day (bpd) refinery is now targeting the broader European market following the cessation of crude oil supplies from International Oil Companies.
Devakumar Edwin, Vice President of Oil and Gas at Dangote Industries Limited, confirmed that the company has already exported its first jet fuel cargo to Europe and is scaling up production rapidly. The refinery has exported 90 percent of its 3.5 billion liters of jet fuel and diesel to Europe, a move attributed to insufficient support from the Nigerian government.
BP is currently transporting its first jet fuel cargo from Dangote to Rotterdam, having secured a portion of a 120,000 metric tonne tender for late May.
OPEC’s report also noted a slight decline in the jet/kerosene crack spread in Rotterdam against Brent in June, influenced by supply dynamics. Despite improvements in air travel, subdued jet fuel demand from the aviation sector has weighed on the product market. However, European jet/kerosene demand is anticipated to rise as aviation consumption increases in the coming months.
Aliko Dangote, President of Dangote Group, stated that the refinery plans to diversify its feedstock sources to include Libyan, Angolan, and Brazilian crude.
Nigeria, Sub-Saharan Africa’s largest oil producer, extracted 1.5 million barrels per day in June, according to the Platts OPEC Survey by S&P Global Commodity Insights. Historically, Nigeria exported all of its oil due to a lack of refining capacity, relying on imports for gasoline, diesel, and jet fuel for domestic use.
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