The Dangote Refinery has successfully exported its jet fuel to various international destinations, including airports in Iceland, Tenerife, and London.
According to a report by SP Global Commodity Insights, the refinery’s Nigerian-made aviation fuel has reached prominent locations such as Heathrow Airport in the UK, as the petrochemical facility continues to scale up production.
The report further highlights that between January and October this year, the majority of the refinery’s supply has been delivered to the Lome transshipment hub off Togo.
South Korea has also emerged as the largest single export destination, receiving 23,000 barrels per day (b/d) of naphtha.
Additionally, significant volumes of gasoil have been exported to Ghana and other West African nations from the $20 billion mega refinery.
Estimates suggest that at least eight African countries are gearing up to import Dangote Refinery products when it achieves full operational capacity next year.
SP Global notes that the refinery’s operations have already positioned Nigeria as a net exporter of jet fuel, naphtha, and fuel oil.
Forecasts by Commodity Insights indicate that Nigeria could export nearly 50,000 b/d more gasoil from Lagos than it imports by next year, with volumes expected to almost triple by 2026.
Forecast on Petrol Export
With a mission to reduce Nigeria’s reliance on fuel imports, Dangote Refinery was not initially expected to export substantial volumes of petrol. However, as Nigerians continue to grapple with high fuel prices, the company is reportedly exploring export markets.
- Data from the report indicates that Nigeria’s state oil firm, NNPC, previously relied on imports to meet approximately 350,000 barrels per day (b/d) of the nation’s petrol demand.
- However, in November, NNPC announced plans to exclusively source supplies from domestic refineries.
- Despite this shift, Dangote is projected to produce only about 50,000 b/d of petrol as its residue fluid catalytic cracking unit ramps up.
- Meanwhile, the refinery has already agreed to export 200,000 metric tons (mt) of petrol, a development experts warn could spark a domestic political crisis and further pressure global refining margins.
- In addition, improving fuel quality from Dangote has prompted Nigeria’s fuel regulator to restrict access to low-cost but substandard imports. As standards have improved, the government has also ceased shielding consumers from rising prices, SP Global noted.
Import Cost after Subsidy Removal
Moreover, the Nigerian National Petroleum Corporation (NNPC) Limited had limited capacity to manage import costs, with the firm disclosing $6 billion in accumulated debt.
- Data from S&P Global Commodities at Sea shows that the removal of subsidies in May 2023 caused petrol -imports to drop over 40% year-on-year, a decline partly attributed to reduced fuel smuggling.
- Looking beyond domestic markets, Dangote’s search for petrol buyers is projected to exacerbate the decline in global refining margins.
Forecasts from Commodity Insights indicate that petrol margins in Northwest Europe could fall from over $20 per barrel in early 2024 to approximately $7 per barrel by the first quarter of 2025.
What you should know
Nairametrics previously reported that jet fuel from Lagos-based Dangote Refinery now commands nearly two-thirds of Nigeria’s market share, according to a recent report.
- Data from Energy Intelligence, a US-based oil and gas trends tracker, indicates that the 650,000 barrels per day (bpd) refinery has significantly reduced Nigeria’s reliance on imported aviation fuel and driven down prices by approximately $2 to $3 per metric ton.
“We’re already buying from Dangote [now]; it’s slightly cheaper or at least the same price as imports,” said Foluso Sobanjo, Managing Director of Asharami Synergy, in an interview with Energy Intelligence.
- Energy Intelligence estimates that Dangote’s jet fuel now supplies at least two-thirds of Nigeria’s market and nearly half of West Africa’s overall consumption.
Nigeria’s jet fuel imports have declined sharply from 13,000 barrels per day (b/d) in 2023—when imports met all domestic demand—to just 5,000 b/d so far in 2024, the report reveals.
(Nairametrics)
