Petrol imports surge in Nigeria despite Dangote refinery operations

Despite Dangote Refinery operations, Nigeria’s petrol imports surged in October, OPEC reports, though still 60% lower year-on-year.

Nigeria experienced a notable increase in Premium Motor Spirit (PMS) imports in October 2024, according to the Organisation of the Petroleum Exporting Countries (OPEC).

This surge comes despite the September commencement of petrol production at the Dangote Petroleum Refinery, a facility poised to transform Nigeria’s decades-long dependence on fuel imports.

Also read: Despite falling landing costs, Nigeria sees sharp increase in petrol prices

OPEC’s Monthly Oil Market Report revealed that while petrol imports remain 60% lower compared to October 2023, there was a significant rise in imports between September and October 2024.

This increase occurred as petroleum marketers reportedly encountered disputes with the Dangote refinery, prompting continued reliance on imported fuel.

The report cited Europe as the primary supplier of PMS to Nigeria and other West African nations during the review period.

Argus data further highlighted that while exports to the US declined, shipments to West Africa, particularly Nigeria, strengthened.

“Gasoline exports to West Africa compensated for a drop in flows to the US. Exports to Nigeria surged compared to September levels, though still 60% lower year-on-year,” OPEC reported.

The report indicated that PMS exports from Europe to Nigeria contributed to the rise in PMS crack spreads in Rotterdam against Brent crude. Additional European PMS volumes were also directed to Libya and Saudi Arabia.

However, the operations of the Dangote refinery, alongside other refineries such as China’s Yulong petrochemical and Mexico’s Olmeca refinery, are expected to impact international product balances in the coming months, particularly for petrol.

The Dangote refinery, with a capacity of 650,000 barrels per day, is projected to disrupt Europe’s $17 billion annual petrol trade with West Africa.

Analysts predict that as the refinery reaches full operational capacity, it will reduce Nigeria’s reliance on imported fuel, potentially causing closures of European refineries facing intensified global competition.

Reuters reported that about one-third of Europe’s 1.33 million barrels per day petrol exports in 2023 were directed to West Africa, with Nigeria receiving the lion’s share. However, this dynamic is set to shift as the Dangote refinery scales up operations.

OPEC also noted that India’s refinery maintenance in October supported European petrol exports to the Middle East, further boosting the PMS market strength.

Despite these gains, the petrol crack spread against Brent crude averaged $17.34 per barrel, reflecting a $2.13 increase month-on-month but a $14.55 decline year-on-year.

Jet fuel and kerosene markets also recovered slightly, with crack spreads against Brent improving due to reduced refinery runs and lower output.

Increased travel demand toward year-end holidays is expected to provide temporary support to jet fuel markets.