The Dangote Petroleum Refinery, a behemoth with a 650,000-barrel-per-day capacity, has begun to significantly reshape the global petroleum market, particularly impacting Europe. Commissioned in January 2023 and commencing gasoline production in September of the same year, the refinery has quickly transitioned Nigeria from a nation heavily reliant on fuel imports to a petroleum exporter, impacting international markets, particularly in Europe. OPEC, in its Monthly Oil Market Report, has highlighted the refinery’s growing influence, noting that its increasing production and export of gasoline, diesel, and aviation fuel are contributing to a decline in European petroleum product imports, particularly to Nigeria, and are causing shifts in global petroleum flows.
The refinery’s impact extends beyond simply displacing European imports to Nigeria. Its substantial output is adding to the global supply of refined products, leading to adjustments in trade routes and destinations. OPEC predicts that the Dangote refinery’s continued ramp-up of operations will further influence the European gasoline market, creating a ripple effect that necessitates the identification of new markets for the surplus volumes. This shift is underscored by the declining oil product imports observed in the last quarter of 2024, which contributes to a positive outlook for the external sector in impacted regions.
The dynamics of the gasoline market are further complicated by seasonal factors and existing market conditions. While the gasoline crack spread in Rotterdam against Brent saw a slight increase due to healthy exports, gasoline inventories at the Amsterdam-Rotterdam-Antwerp hub remain high. OPEC anticipates these high inventory levels to persist into the near future, driven by reduced winter demand and the increasing gasoline balance in the Atlantic Basin. The ongoing recovery in gasoline refinery output levels globally is expected to exacerbate the already bearish market sentiment.
The Dangote refinery’s impact isn’t limited to gasoline. Its production of diesel and aviation fuel also contributes to the changing global petroleum landscape. While the report focuses primarily on the gasoline market, the refinery’s overall output contributes to a more complex and interconnected market, where supply and demand dynamics are influenced by a multitude of factors, including refinery output, seasonal demand fluctuations, and geopolitical events. This complexity requires constant monitoring and analysis to understand the evolving trends and their potential impact on different regions and market players.
Nigeria’s own crude oil production also plays a role in this dynamic. According to OPEC’s secondary sources, Nigeria’s average daily crude production reached 1.507 million barrels in December 2024, a notable increase from the previous month. However, figures provided by the Nigerian government and the Nigerian Upstream Petroleum Regulatory Commission suggest a slightly lower production of 1.485 million barrels per day. This discrepancy highlights the challenges in accurately assessing production levels and underscores the importance of reliable data for informed decision-making in the oil market.
The scale of the Dangote refinery underscores its significance in the global petroleum market. With a refining capacity of 650,000 barrels per day, it surpasses the capacity of the largest refineries in Europe, including Shell’s Pernis refinery in the Netherlands, which has a capacity of 404,000 barrels per day. This significant capacity differential positions the Dangote refinery as a major player in the global refining landscape, capable of influencing product availability and pricing dynamics. Its presence signifies a shift in global refining capacity, with a significant increase in refining capabilities now located outside of traditional refining hubs.
