Dangote production pushing some EU refineries out of business – OPEC

THE Organisation of the Petroleum Exporting Countries (OPEC) has confirmed that 650,000 barrels per day/bpd Dangote Refinery capacity to ramp-up production is pushing some European refineries which hitherto serviced the Nigerian market out of business.

The Dangote refinery, which began operations in January last year, started producing Premium Motor Spirit (PMS) in September, years after the country had relied solely on importation for its fuel needs with the Nigerian National Petroleum Company Limited (NNPCL) superintending the import over the years.

Following the commencement, the refinery has exported petrol, diesel, and aviation fuel to other countries within and outside Africa.

A report by OPEC on Wednesday, January 15, stated that the emergence of Dangote refinery has reduced the importation of petroleum products from Europe to Nigeria.

“The ongoing operational ramp-up efforts at Nigeria’s new Dangote refinery and its gasoline (petrol) exports to the international market will likely weigh further on the European gasoline market.

“Continued gasoline production in Nigeria, a country that has relied heavily on imports to meet its domestic fuel needs in the past, will most likely continue to free up gasoline volumes in international markets which will call for new destinations and flow adjustments for the extra volumes going forward,” the report stated.

Commenting on the development, an energy analyst, Adeola Adenikinju, who is also a professor of Energy economist at the University of Ibadan, told The ICIR that several European refineries which are used to refining Nigeria’s crude may have to seek alternative with the emergence of Dangote Refinery.

“Nigeria imports most of its imported Petroleum products from Belgium, Netherlands, Norway, India and Korea Republic. These countries will really seek alternatives now Nigeria has ramped up production from Dangote and other local refineries,”Adenikinju told said.

He stressed that the improved local refining capacity is good business for the economy, but also warned the government to ensure proper regulatory oversight that will avert monopoly.

It would be noted that in the last quarter of 2024, OPEC said “imports also declined, particularly oil product imports, improving the outlook for the external sector.”

The OPEC report stated that the gasoline crack spread in Rotterdam against Brent increased slightly on healthy exports as confirmed by gasoline inventories.

It added that the gasoline inventory builds are expected to extend into the coming month amid a lengthening gasoline balance in the Atlantic Basin due to winter-season demand-side pressures.

OPEC maintained that the ongoing recovery in gasoline refinery output levels will likely exacerbate the already bearish market sentiment.

Meanwhile, the monthly Oil Market Report disclosed that the average daily crude production in Nigeria hit 1.507 million barrels in December, according to data OPEC got from secondary sources.

It was said to have risen by 12,000bpd, from 1.477mbpd in November.

However, the figure supplied by the government was 1.485mbpd for December. This aligns with that of the Nigerian Upstream Petroleum Regulatory Commission.

Recall that the Dangote refinery was ranked above the 10 biggest refineries in Europe because of its capacity, according to data compiled by Bloomberg.

The ICIR reports that the  $20bn Dangote refinery can refine 650,000 barrels of petroleum products per day and is gradually becoming petroleum market leader while influencing pricing largely in the downstream sector.

The OPEC report further stated that this is over 246,00bpd capacity more than Shell’s Pernis refinery located in the Netherlands.

It added that the Pernis refinery has an installed capacity of 404,000bpd the biggest in Europe. The BP Rotterdam in the Netherlands has 380,000 capacity.