The market shares of European refiners are being greatly impacted by Nigeria’s recently operational Dangote refinery, which is rapidly increasing its gasoil exports to the Western African market. Aliko Dangote, the wealthiest businessman in Africa, is in charge of the $20 billion project, which is located outside of Nigeria’s thriving economic center, Lagos.
The refinery has been channeling more gasoil—nearly 100,000 barrels per day in May, a sharp increase from April—and is becoming a focal point of regional trade dynamics. This production boost is essential as the refinery works to maximize its operating capacity, which has been generating gasoil of inferior quality because of a delay in the complete activation of units required for the manufacture of cleaner fuels.
Despite these challenges, the Dangote refinery has not only targeted local markets but also shipped significant quantities to other West African countries, with one batch reaching as far as Spain. However, recent figures suggest a dip in gasoil volumes for June, although the total export of oil products like fuel oil, naphtha, and jet fuel remains high, reflecting a versatile production strategy.
There has been a noticeable change in trade balances. According to data from Kpler, Russian shipments fell to an eight-month low in May, while exports from the EU and the UK to West Africa fell to a four-year low of 29,000 barrels per day. This change in the dynamics of the market highlights the Dangote refinery’s growing sway over the local oil market.
At the same time, the refinery is entangled in a dispute within the community about the amount of sulfur present in its gasoil. Nigeria, in compliance with the oil laws of 2021, which are in line with the 2020 ECOWAS requirements, requires the sulfur content of gasoil to be no more than 50 parts per million. But for a limited time, the Dangote refinery has been allowed to sell gasoil with sulfur levels up to 200 parts per million since the onset of the year, an agreement meant to ease the transition to stricter environmental standards.
The European tightening on high-sulphur gasoil exports has inadvertently benefited the Dangote refinery, allowing it to find markets in regions with less stringent motor fuel standards. According to industry insiders, the refinery has produced and exported gasoil containing 800 to 1,300 ppm of sulphur—substantially above the upcoming regulatory ceiling.
Yet, the refinery is on a clear path to compliance. Davakumar Edwin, an executive at the Dangote Refinery, confirmed the nearing completion of essential equipment setup expected to produce 10 ppm sulphur gasoil within a fortnight. This advancement is part of Dangote’s broader strategy to align with global environmental standards and enhance the quality of its exports.
