Dangote Refinery Disrupts European Fuel Market – OPEC

The Organisation of the Petroleum Exporting Countries (OPEC) has highlighted how the Dangote Petroleum Refinery’s efforts to boost Premium Motor Spirit (PMS) production are reshaping the European fuel market.

The refinery, with a capacity of 650,000 barrels per day, began operations in January last year and started PMS production in September.

This marked a significant shift for Nigeria, which previously relied entirely on fuel imports. The facility has since exported petrol, diesel, and aviation fuel to various countries, both within and beyond Africa.

An OPEC report on Wednesday noted that the Dangote Refinery has reduced Nigeria’s dependency on imported petroleum products from Europe.

“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.

OPEC observed that in the last quarter of 2024, Nigeria’s petroleum product imports declined, enhancing the country’s external sector outlook.

Dangote Refinery Operations: FRSC Lagos Takes Action Ahead

 An emergency meeting organized by the Lagos State Sector Command of the Federal Road Safety Corps (FRSC) was held on Sunday, 15th September 2024, to address traffic and safety concerns surrounding the Dangote Refinery and Lekki Free Trade Zone.

The Sector Commander, CC Patrick Davou, emphasized the urgency of implementing swift measures in response to the anticipated increase in traffic. With contributions from key FRSC officials, the meeting resulted in the launch of the Special Interventional Traffic Management (SITM) operation, aimed at ensuring efficient traffic flow and heightened road safety.

To this end, there has been more deployment of personnel, vehicles, and materials to the maritime corridor to ensure smooth operations and maintain road safety. The FRSC remains committed to proactively managing the increased traffic in the area, and road users are advised to cooperate with the staff of the FRSC in this regard.

Dangote Refinery Begins Petrol Production Test-Run

The 650,000-barrel-per-day Dangote refinery is undergoing test runs for Premium Motor Spirit or petrol production, with full operation expected by mid-September.

This was revealed by Reuters quoting a note by industry monitor IIR Energy.

The $20bn refinery built by Aliko Dangote, which has so far only produced diesel and other distillate fuels, had earlier said that petrol deliveries from the refinery would start in July. Before that, the refinery had aimed to start making the motor fuel by May.

“It is possible that there could be further extensions”, IIR said in a note to clients.

Once fully operational, the refinery is set to upend the Europe-to-Africa fuel trade and reduce Nigeria’s reliance on imported refined products.

Earlier in the month, the Federal Government’s committee which was set up to ensure the implementation of crude oil sales to local refineries in naira, had reached an agreement with the Dangote Petroleum Refinery for the rollout of petrol in September this year.

The report stated that the Federal Government also disclosed that the sale of crude oil to Dangote Refinery and other local refineries will commence on October 1, 2024.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, announced this during a meeting with the Implementation Committee in Abuja.

Also at the meeting, the Executive Chairman of the Federal Inland Revenue Service, Dr Zacch Adedeji, and the Chairman of the Technical Sub-Committee reported that “The first PMS delivery from Dangote is expected next month under existing agreements.”

Dangote Refinery Insists Petrol Will Hit Local Market In August

Dangote Refinery has insisted that Premium Motor Spirit (PMS), popularly known as petrol, refined at the refinery, will hit the market by August.

The company’s Group Chief Branding and Communications Officer, Anthony Chiejina, disclosed this to PREMIUM TIMES in an interview on Monday.

The response came amid concerns over the earlier announcement that the refinery would commence domestic supply by mid-August.

When asked why the refinery is yet to commence domestic supply at its stipulated date of 12 August, Mr Chiejina said, “We said August, and today is 12 August. Just wait; this is August.”

Over the months, the company had set dates for its domestic petrol supply, but the timelines were unmet.

In June, the President of Dangote Group, Aliko Dangote, said petrol, refined at the refinery, will hit the market in July.

Mr Dangote, who disclosed this when he received a Senate delegation led by Senate President Godswill Akpabio on a tour of the facility, explained that the date change was because of a delay that prompted the shift from the initially proposed date of June to mid-July.

“We had a bit of delay, but PMS will start coming out by 10 to 15 of July. But then, we want to keep it in the tank to make sure that it settles. So by the third week of July, we’ll be able to come out to take it into the market,” Mr Dangote said at the time.

Again, in July, Mr Dangote said petrol production in the refinery was disrupted because of the fire incident at the refinery

PMS was supposed to be out by July, but we had a fire incident. The incident disrupted us for a few days, but latest 10 or 12 of August, PMS will be ready,” Mr Dangote said while addressing journalists at the refinery at the time.

The refinery
The 650,000 barrels per day Dangote Petroleum Refinery commenced diesel and aviation fuel production in January.

Announcing the commencement of production, the company said the refinery had received six million barrels of crude oil at its two SPMs 25 kilometres from the shore.

The first crude delivery was done on 12 December 2023, and the sixth cargo was delivered on 8 January.

The company made a further move towards the commencement of the production of refined petroleum products with the receipt of an additional one million barrels of bonny light crude supplied by the Nigeria National Petroleum Company (NNPC Ltd).

The company commenced supplying petroleum products to the local market in April.

Background

In recent months, the Dangote Group and the petroleum regulators in Nigeria have been at loggerheads over the control of the petroleum downstream market.

In June, the Dangote Group accused some international oil companies of sabotaging the plant’s operations by refusing to supply crude or offering oil at higher premiums than market prices.