Dangote Refinery Set to Impact Fuel Market with Introduction of Gasoline Output

The Dangote Petroleum Refinery, with its capacity of 650,000 barrels per day, is capitalizing on the availability of cheaper oil imports from the United States, which account for up to a third of its feedstock as it commences production.

According to a report by Bloomberg on Thursday, the refinery has begun shipping products in recent weeks while preparing two units to facilitate gasoline output, which is expected to significantly impact the fuel market in Nigeria and the broader region, as noted by analysts.

Alan Gelder, Vice President of Refining, Chemicals, and Oil Markets at Wood Mackenzie, stated, “Dangote is going to influence Atlantic Basin gasoline markets this summer and for the rest of the year,” anticipating a notable shift in the West African gasoline supply balance with the introduction of the residue fluid catalytic cracking unit (RFCC).

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Currently operating at approximately 300,000 barrels per day, almost half of its nameplate capacity, the refinery is gradually expanding its product slate, including jet fuel, gasoil, and naphtha.

Analysts estimate that the gasoline-focused units will come online this summer, with the RFCC expected to be operational by the year’s end.

Related News: Marketers Seek Reduction in Dangote Refinery Diesel Price to N700 – N850 per Litre

While Dangote Industries announced earlier this month that gasoline deliveries would commence in May, specific details regarding the refinery’s operations were not immediately available.

Despite running at reduced capacity, the refinery has already made a significant impact on product markets, particularly with the recent reduction in diesel prices, announced by the refinery’s spokesperson, Tony Chiejina.

This reduction, from N1,200/litre to N1,000/litre, is expected to positively influence various sectors of the economy and contribute to lowering the country’s high inflation rate.

Bloomberg’s report also highlighted that a substantial portion of the oil received by the refinery thus far has been US-grade WTI Midland, indicating a preference for foreign oil as long as it remains competitively priced compared to local supplies.

However, recent Nigerian government directives aim to reverse the country’s reliance on imported refined products by compelling domestic refineries to purchase crude locally, with flexibility in using either the local currency or the US dollar for transactions.