The Organisation of Petroleum Exporting Countries (OPEC) has highlighted that the Nigeria-based Dangote Refinery and Petrochemicals, the world’s largest single-train refinery, is set to disrupt Europe’s oil and gas market, particularly affecting the Northwest Europe (NWE) Gasoil sector.
In its June 2024 Oil Market Report, OPEC identified the Dangote Refinery as a major new supplier of diesel and jet fuel that could challenge Europe’s existing oil industry dynamics. This shift is expected to have a positive impact on the Nigerian economy.
Reports from Standard & Poor Global have also indicated that the $20 billion Dangote Refinery, which began operations in January, is already influencing international crude flows, with potential for greater disruption as it reaches full capacity.
OPEC’s report notes that increased production from the Dangote Refinery, along with supplies from the Middle East and Mexico’s Olmeca refinery, is likely to pressure NWE gasoil performance in the coming months. Europe’s reliance on imports from Asia and the US grew after the EU banned Russian diesel, making the continent vulnerable to new market entrants like the Dangote Refinery.
Owned by Africa’s richest man, Aliko Dangote, the refinery has already made significant inroads into the European market. Despite challenges at home, including limited support from the Nigerian government, the refinery has exported 90% of its 3.5 billion liters of jet fuel and diesel to Europe.
BP has begun transporting its first jet fuel cargo from the Dangote Refinery to Rotterdam, indicating the scale of its influence. OPEC also observed that the supply of jet fuel from Dangote is already affecting pricing and market dynamics in Europe.
In its first six months, the refinery has scaled up to a production capacity of 400,000 barrels per day, supplying diesel, jet fuel, naphtha, and fuel oil to both domestic and international markets. Gasoline production is expected to begin by mid-August.
The refinery’s operations are impacting crude oil markets, particularly in Europe, which is a major consumer of Nigerian light, sweet crude. The Dangote Refinery’s focus on Nigerian crude, alongside imports like US WTI Midland, is tightening supply in these markets, leading to potential disruptions.
Aliko Dangote has emphasized that while the refinery was built to process Nigerian crude, it is also open to sourcing from other countries, including Libya, Angola, and Brazil, to maintain operations.
The refinery marks a significant shift for Nigeria, which has long exported its crude oil and imported refined products due to a lack of domestic refining capacity. With the Dangote Refinery now operational, Nigeria is poised to become a key player in the global oil and gas industry.
