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Major refinery plants in Europe, the US and Asia are making money due to higher margins as a result of threats of supply outages, and potential sanctions on Russia, however, Nigeria’s giant Dangote Refinery is struggling to capitalize on this due to operational challenges and fierce competition with local marketers.
Relentless attacks on Russia’s energy infrastructure, outages at key plants in Asia and Africa and permanent closures across Europe and the US have removed millions of barrels of diesel and gasoline from the world market.
Added to these are traders’ fears of what’s yet to come: imminent US sanctions on Lukoil PJSC and Rosneft PJSC and fresh European Union curbs on fuels made from Russian crude which threaten already squeezed supply-chains.
“Global refining activity has been challenged by a series of unplanned outages in October, further constraining product markets and pushing margins even higher,” the International Energy Agency said Thursday.
In the US, Europe and Asia, margins are the highest they’ve been at this time of year since at least 2018, according to fair value data compiled by Bloomberg.
Dangote Refinery outages
A key gasoline-production unit at the Dangote refinery is however reportedly scheduled to halt for about 50 days of maintenance in coming weeks, having only recently begun restarting.
The plant’s main gasoline engine, the residue fluid catalytic cracker (RFCC), recently went offline in September shortly after a three-week turnaround in August.
Devakumar Edwin, a vice president at Dangote Group responsible for overseeing refinery operations, said the RFCC restarted around Oct. 7 and should soon be back at full capacity.
“We have resolved most, not all, but most of the problems. And I think we’re looking for a window when we shut down for another month,” Aliko Dangote told S&P Global, in a rare comment on maintenance plans.
The month-long turnaround will involve shutting down the RFCC, but not the crude distillation unit (CDU) and other secondary units.
The entire refinery only requires a full turnaround every five years, Edwin said. Dangote said that the RFCC turnaround will be planned to avoid clashing with a seasonal demand peak towards the year-end, without providing dates.
Refined product supplies are being further squeezed by outages elsewhere. In Kuwait, the giant 615,000 barrel-a-day Al-Zour refinery recently had only one of its three crude processing units operating.
US crude runs in recent weeks have been more than a million barrels a day lower than the same time last year, a huge drop from the peak summer demand months, when processing was at its highest seasonal level since 2019.
The country has seen multiple refinery closures in recent years, as has western Europe, further pressuring fuel supplies.
Dangote forced to compete with marketers on price
Last week, the latest price data from Petroleumprice.ng showed that Dangote Refinery reduced its gantry price of Premium Motor Spirit (petrol) by N49 per litre.
The refinery now sells petrol at N828 per litre, down from N877, representing a 5.6 percent decrease, marking the refinery’s second major adjustment in three months as it responds to market realities and efforts to stabilise domestic supply.
The President of the Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, explained that imported products (65% of total demand) currently complements the 30 to 35 per cent local production from facilities such as the Dangote Petroleum Refinery.
However, to ensure that their investments are protected and no one pushes them out of business, some depot owners have equally responded by dropping their gantry prices to attract patronage.
Petroleumprice.ng revealed that Aiteo, Bovas and Eterna sold a litre of petrol at; N850, N848 and N870 respectively, while AIPEC, Ardova, Integrated and NIPCO pegged theirs at; N869, 870, N869 and N868 respectively.
Given the typically slow earnings during the commencement phase of the Dangote Refinery, net debt to EBITDA weakened to 13x in 2024, but strengthened to 4.6x in H1 2025 following improved earnings.
However, operating cash flows remained negative due to elevated working capital and finance cost pressures, according to GCR Ratings.
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