Nigeria’s Dangote oil refinery is on the verge of revolutionizing the continent’s energy landscape. With projections to slash the $17 billion annual gasoline imports from Europe to Africa, the refinery’s full operational capacity threatens to disrupt the status quo, particularly for European refineries grappling with heightened competitive pressures.
According to a recent report by Reuters, the Dangote refinery, which commenced production in January following an investment of $20 billion, boasts an impressive refining capacity of 650,000 barrels per day (bpd). Once it reaches its anticipated full capacity, expected either this year or next, it will stand as one of the largest refineries across both Africa and Europe.
The significance of this development cannot be overstated, particularly in light of recent trade dynamics. In 2023 alone, approximately one-third of Europe’s average gasoline exports, totaling 1.33 million bpd, found their way to West Africa, with Nigeria serving as the primary destination, as highlighted by data from Kpler.
Despite Nigeria’s status as Africa’s most populous nation and a key oil producer, it has long grappled with the need to import nearly all of its fuel due to inadequate refining capacity. The emergence of the Dangote refinery signals a potential turning point, promising to significantly reduce dependency on foreign imports and bolster the nation’s energy independence.
However, the refinery’s ascent also poses challenges for European counterparts. Eugene Lindell, head of refined products at consultancy FGE, cautioned that smaller European refineries lacking the capability to meet stringent European and US standards may face heightened competition and operational difficulties. Andon Pavlov, an analyst at Kpler, warned that as much as 300,000 to 400,000 bpd of Europe’s refining capacity could face closure in the wake of increased global gasoline production, with refineries in Grangemouth, UK, and Wesseling, Germany, particularly vulnerable.
This trend adds to the existing woes of European refineries, which have been grappling with market fluctuations and declining global demand for fossil fuels. Over the past decade, approximately 30 European refineries have shuttered their operations, leaving around 90 facilities operational, according to data from Concawe. The sector has witnessed a significant decline in operational crude distillation, reflecting the challenges faced by European refineries in a rapidly evolving energy landscape.
Against this backdrop, the Dangote refinery’s emergence represents a seismic shift, not only for Nigeria but for the broader African continent. As the refinery gears up to achieve full operational capacity, it holds the promise of reshaping Africa’s oil trade dynamics and bolstering regional energy security. With its potential to produce up to 53 million liters of gasoline daily, equivalent to around 300,000 bpd, the refinery stands poised to chart a new course for Africa’s energy future.
Credit: Nairametrics (Text Excluding Headline)
