Dangote refinery commences gasoil exports to West Africa

The Dangote oil refinery has started exporting gasoil to West African countries, thereby taking a share of the market previously held by European refiners, as reported by shipping data and traders.

The $20 billion refinery is currently operating at a reduced capacity, producing a lower-grade gasoil than initially expected, due to the temporary shutdown of key units required for the production of higher-grade, cleaner fuels.

Reuters reports that, consequently, the refinery is now looking to sell its lower-grade gasoil to buyers in nearby markets.

The report, quoting data from analytics firm, Kpler, indicated that in May, gasoil exports from the refinery reached nearly 100,000 barrels per day (bpd), almost doubling April’s levels.

It said m toost of these exports were directed to other West African countries, with one shipment sent to Spain.

However, preliminary data for June shows a significant drop in gasoil volumes, although overall oil product exports, including fuel oil, naphtha, and jet fuel, remained relatively high at 225,000 bpd.

“The refinery has shifted the balance in West Africa,” impacting European markets, a European distillates trading source told Reuters.

Kpler data revealed that EU and UK gasoil exports to West Africa fell to a four-year low of 29,000 bpd in May, while Russian exports to the region dropped to an eight-month low of 87,000 bpd in the same month.

Dangote has been selling some high-sulphur gasoil in the Nigerian market, but a dispute has arisen with local fuel retailers over who is responsible for selling the dirtier fuel.

The Petroleum Industry Bill passed in 2021, mandated a sulphur content of 50 parts per million (ppm) to align with the sub-regional ECOWAS standards adopted in 2020.

However, the regulatory authority granted a temporary exemption, allowing the sale of gasoil with sulphur content exceeding 200 ppm in the local market from January to June, providing refineries and importers with additional time to adapt to the new standards.

Amidst increasingly stringent regulations on high-sulphur gasoil exports in European countries, such as Belgium and the Netherlands, cargoes from the Dangote refinery have been redirected to regions with less stringent motor fuel standards.