The Organisation of Petroleum Exporting Countries (OPEC) has announced that the launch of Nigeria’s Dangote refinery and Mexico’s Dos Bocas refinery will significantly impact oil production in the United States and Europe.
Previously, these regions, along with several African countries, were the primary markets for premium motor spirit (PMS), commonly known as petrol, that was refined in the U.S. and Europe.
According to findings from Vanguard, the Dos Bocas refinery has the capacity to process approximately 340,000 barrels per day (bpd), which will make Mexico self-sufficient in refined petroleum products. Meanwhile, the Dangote Oil Refinery can handle 650,000 bpd, enabling it to meet the demands of Nigeria and West African markets.
In its latest report, the 2024 World Oil Outlook 2050, OPEC stated, “New mega-projects are set to change the international downstream market. For example, the start of the Dangote refinery and the upcoming operation of the Dos Bocas refinery could significantly impact the gasoline market in the Atlantic basin.”
The report added that both regions currently import large amounts of gasoline from the international market, but this could change once the two refineries operate at full capacity. This shift could negatively affect refineries in the U.S. and particularly in Europe, where gasoline markets are stagnating.
Geopolitical Influences on Trade Dynamics
The report noted that geopolitics still heavily influence the downstream market and related trade dynamics. The European Union’s (EU) embargo on Russian crude oil and product exports has changed oil flows, with EU refiners increasing imports from regions such as the U.S. and the Middle East. EU imports of non-Russian products have also risen, especially from India, the U.S., and the Middle East. New plants in the Middle East have started exporting diesel to the EU, including facilities in Jizan, Saudi Arabia, and Duqm, Oman.
The report highlights that global refinery throughput continues to grow.
Nigeria’s Rising Role in Global Trade
Commenting on the OPEC report, NJ Ayuk, Executive Chairman of the African Energy Chamber, said, “Nigeria is emerging as a key player in global trade for middle distillates and light ends. The Dangote refinery will soon rival the largest refining sites in the U.S. and is more than 50% larger than Europe’s biggest refinery.”
Ayuk cautioned that ramping up refinery operations can be challenging and may encounter delays. However, once the Dangote refinery operates at full capacity, it is expected to transform fuel markets in West Africa and change trade flows in Europe. He noted that Nigerian refined products will likely start reaching Northwest Europe, traditionally an exporter in this area. He also mentioned that as the Dangote refinery purchases crude at full capacity, there will be less available in the Atlantic basin, particularly in Europe.
Wumi Iledare, a Professor Emeritus in Petroleum Economics and Policy, echoed Ayuk’s sentiments, stating, “The 650,000 bpd capacity could lead to product exports to Gulf of Guinea countries if prices are set appropriately.”
Dangote Petrol Starts Arriving
In related news, Vanguard has learned that Dangote petrol has begun arriving at independent depots in Lagos. Major marketers, including 11 Plc, Total Energies, and AA Rano, are reportedly lifting petrol from Dangote for their retail outlets. However, independent retail marketers have not yet started to lift petrol directly from the Dangote refinery.
Chief Chinedu Ukadike, Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed optimism about the situation. He mentioned an upcoming meeting between Dangote and IPMAN, stating, “We are hopeful that Dangote will begin distributing directly to independent marketers. Their move to distribute through coastal areas with vessels is positive, as it could eliminate the ghost scarcity that has persisted for years. Once operations begin effectively, this scarcity will be gone.”
Ukadike added that while prices are currently high, supply levels will dictate future pricing. He emphasized that deregulation relies on competition and that prices will decrease when there is sufficient product available in the country.
Human Rights Group Accuses Marketers of Price Manipulation
In a related development, the Human Rights Writers Association of Nigeria (HURIWA) has accused fuel marketers in the Federal Capital Territory (FCT) of widespread price manipulation and tampering with metering devices.
In a statement from its National Coordinator, Comrade Emmanuel Onwubiko, HURIWA alleged that independent marketers, including those under the Nigerian National Petroleum Company Limited (NNPCL), were intentionally manipulating prices and fuel pumps. “We are deeply shocked that consumers in Abuja are subjected to these unfair practices,” Onwubiko said. The rights group highlighted that these issues are especially common at NNPCL-managed stations, even near government institutions like the Nigeria Police Force Headquarters and Transcorp Hilton.
HURIWA expressed concern that these illegal activities might be supported by powerful individuals within the government. The group called on the Federal Competition and Consumer Protection Commission (FCCPC), along with the Directorate of State Services (DSS), Nigeria Police Force, EFCC, and ICPC, to conduct immediate investigations. They urged these agencies to carry out surprise visits to fuel stations in Abuja to catch the culprits and take decisive action to protect consumers.
HURIWA stressed that the sophisticated nature of the price manipulation and tampering with metering devices requires urgent intervention from enforcement agencies to ensure fair pricing for consumers in the FCT.
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