Nigeria’s new Dangote oil refinery is boosting diesel exports to West Africa, taking market share from European refiners, according to traders and shipping data.
The $20 billion refinery, built by Africa’s richest man, Aliko Dangote, on the outskirts of Lagos, is producing lower quality diesel than expected as it awaits the restart of the units needed to production of cleaner fuels, prompting it to seek buyers in neighboring markets.
Gasoil exports from the refinery reached nearly 100,000 barrels per day (bpd) in May, almost doubling April levels, according to data from analytics firm Kpler. The majority of exports went to other West African countries, but one shipment was sent to Spain.
Preliminary diesel volumes for June fell sharply, although overall exports of petroleum products, including fuel oil, naphtha and kerosene, remained relatively high at 225,000 bpd, the data showed.
The refinery “changed the balances in West Africa,” which affected European markets, a European distillate trading source said.
EU and UK diesel exports to West Africa fell to a four-year low of 29,000 bpd in May, according to Kpler data, while Russian exports to the region fell to an eight-month low of 87,000 bpd in May.
Dangote also sold high-sulfur diesel in the Nigerian market, but found himself caught in a conflict with local fuel retailers over who sold the dirtiest fuel.
Nigeria’s petroleum law passed in 2021 mandates a sulfur content of 50 parts per million (ppm), in line with ECOWAS sub-regional standards adopted in 2020. However, the regulator has allowed the local sale of diesel at over 200 ppm from the beginning of the year until June, to give local refineries and importers more time to comply with the new standard.
As European countries, including major hubs Belgium and the Netherlands, tighten rules on exports of high-sulfur diesel, shipments from the Dangote refinery have found their way to regions where fuel standards are lax.
A trade source with knowledge of the specifications said the refinery produced and exported diesel containing 800 to 1,300 ppm diesel, well above the 200 ppm limit.
However, the company said it is on track to achieve 10 ppm diesel content soon.
“We have commissioned the equipment and it will be done within two weeks,” said Davakumar Edwin, an executive at Dangote Refinery. In a statement last week, Dangote said it was working progressively to achieve the new standard.
