3 months ago
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- The Dangote Refinery is touted as a top challenger to European refineries which export products to Africa
- Reports say the Dangote refinery may cause the closure of over 90 European refineries, which have no financial muscle to compete
- The Dangote Refinery has already exported about six cargoes to three West African countries and an Asian country
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.
Aliko Dangote has expressed frustration over challenges faced by his refinery in Nigeria, including potential sabotage and regulatory disagreements.
Once operational, the Dangote Refinery is expected to significantly impact the global oil market, potentially leading to the closure of numerous European refineries due to heightened competition.
Source: UGC
Dangote Refinery to capture African market
Despite these challenges, the refinery is seen as a crucial asset for Nigeria's economic future, and there are calls for the government to support its success rather than hinder it.
The situation has sparked discussions on the role of government in supporting private sector initiatives and the potential for monopolies in the Nigerian market.
For more than a decade, European refineries have enjoyed robust patronage from the Nigerian market. An unreliable power supply from the country’s national grid forces firms across the country to rely heavily on imported refined petroleum products valued at $17 billion annually.
Traders and shipping data show that the $20 billion Dangote Refinery is ramping up fuel exports to West Africa, capturing market share from European refineries.
Analysts predict the closure of European refineries
Analysts say that about 400,000 barrels of refining capacity in Europe daily is at risk of closure due to the rising fuel production.
According to reports, data showed that EU and the UK fuel exports to West Africa dropped to a four-year low of 29,000 barrels in May, while Russian exports dipped to an eight-month low of 87,000 barrels in the same month.
According to the analysts, losing the market share of European refineries to 650,000 bpd-capacity refineries will be a tough challenge for them.
Eugene Lindell, head of refined products at FGE, an energy consulting firm, said the loss of the West African market will challenge a small number of refineries that lack the financial firepower to upgrade and compete in the industry.
Experts say the dispute between Dangote and Nigeria’s oil industry regulators may be due to the imminent disruption when the refinery reaches full refining capacity.
The development comes as Aliko Dangote, Chairman of the Dangote Group, is entangled in a dispute with regulators in Nigeria over crude oil supply to his gigantic refinery and the quality of fuel from the facility.
Reports say Dangote has exported six aviation fuel/kerosene cargo to Togo, Senegal, and Ghana in Africa and Singapore in Asia.
Dangote fights Nigerian regulators
In the last few months, the Dangote Group has engaged in a row with international oil companies (IOCs), whom it accused of inflating crude oil prices above the market rate.
The refinery management also accused the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) of issuing licenses to oil companies that import dirty fuel into the country.
Things climaxed on Thursday, July 19, 2024, when NMDPRA’s chief executive officer, Farouk Ahmed, said the diesel from the Dangote Refinery was of low quality and accused the group of planning to monopolise the energy industry in Nigeria.
The Dangote Group debunked the statement, stating that its fuel is 80% superior to imported products.
Dangote refinery bigger than 10 biggest refineries in Europe
Legit.ng earlier reported that the Dangote refinery's capacity has been ranked as one of the biggest in the world, including the ten biggest refineries in Europe.
The $20 billion Dangote refinery located in Lagos state can refine 650,000 barrels of petroleum products per day.
Bloomberg reports that the Dangote Refinery's capacity is larger than that of the ten largest refineries in Europe.
Source: Legit.ng
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