The recently built Dangote refinery could have a huge impact on the European oil market. The facility threatens to increase competition for European refineries in a market that already appears oversaturated.
According to experts, the Dangote refinery might put an end to the decades-long gasoline trade from Europe to Africa, worth $17 billion annually.
Kpler records, as reported on the American news site Reuters, show that West Africa received almost one-third of Europe’s 1.33 million BPD average gasoline exports in 2023, more than any other area, with Nigeria obtaining the lion’s share.
However, this is expected to change once the Dangote refinery, which is said to be capable of refining up to 650,000 barrels per day (bpd), begins full production.
When the refinery achieves full capacity, it will be the largest in Europe and Africa.
The refinery’s opening has been regarded as a watershed point in Nigeria’s quest for energy independence. Despite being the continent’s largest country by population and the leading oil producer, Nigeria’s oil industry has been hampered by an inability to refine its own oil, leaving it vulnerable to foreign markets.
The Dangote refinery, coupled with the renovation of the country’s decrepit refineries, is intended to change its dependence.
“The loss of the West African market will be problematic for a small set of refineries that do not have the kit to upgrade their gasoline to European and U.S. specification,” said Eugene Lindell, head of refined products at consultant FGE.
According to Kpler analyst Andon Pavlov, 300-400,000 bpd of European refining capacity is at risk of being phased out as global gasoline output increases.
A European refinery executive who declined to be identified claimed that coastal refineries designed for exports will be more vulnerable, whereas inland refineries will be less exposed because they rely on domestic demand.
“The changes won’t happen overnight, but they could ultimately lead to closures of refineries and their conversion to storage terminals,” he said.
“According to data from the refining industry group Concawe, over 30 European refineries have closed since 2009, with nearly 90 units of varied sizes and complexities continuing in operation. Reuters reports that closures have occurred due to competition with newer and more complicated operations in the Middle East and Asia, as well as the impact of the coronavirus epidemic.
$20.5 billion. Dangote Refinery, Africa’s largest, was built over two decades and has a processing capacity of 650,000 barrels per day. It intends to produce 250,000 barrels of gasoline per day and 100,000 barrels each of gasoline and diesel.
The refinery would generate oil for both local and international markets. The Independent Petroleum Marketers Association of Nigeria (IPMAN) has sanctioned 150,000 petrol stations to accept fuel from the newly built private Dangote refinery.
The refinery, which has a capacity of 650,000 barrels per day, is expected to have an impact on global oil and fuel flows, with the trading community waiting to see how large this impact would be.
According to Reuters, the refinery processed approximately 8 million barrels of oil between January and February and will take several months to reach full capacity.
