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Nigeria’s new mega Dangote oil refinery is slowly grinding into gear, with the 650,000 barrel-a-day plant in Lagos is taking advantage of cheaper US oil imports for as much as a third of its feedstock.
It’s been shipping products in recent weeks while readying two units to enable gasoline output that will deliver a long-promised transformation of the fuel market both in Nigeria and the region, according to analysts.
“Dangote is going to influence Atlantic Basin gasoline markets this summer and for the rest of the year,” said Alan Gelder, consultancy Wood Mackenzie’s vice-president of refining, chemicals and oil markets.
“When the residue fluid catalytic cracking unit or RFCC comes online, that’ll really shake things up because it alters the West African gasoline supply balance,” he said, referring to a residue fluid catalytic cracking unit that upgrades heavier products.
The refinery is running at about 300,000 barrels a day, nearly half its nameplate capacity, according to the average estimate of analysts at WoodMac, FGE and Citac. The complex has started shipping jet fuel, gasoil and naphtha as it widens to a full slate of products.
Wood Mackenzie expects to see the gasoline-focused units to be online this summer, while other analysts expect the RFCC to take until the end of the year. Dangote Industries said earlier this month that gasoline deliveries will start in May.
“The refinery is already having a sizable impact on product markets even running in its most stripped back form at minimum rates,” said Ronan Hodgson, an energy analyst at FGE. Units that boost diesel quality will also start up in the coming months.
As much as a third of the oil shipped into the giant refinery so far has been US grade WTI Midland, according to shipping information compiled by Bloomberg. That’s likely to continue as long as the foreign oil undercuts the price of local supplies, Hodgson said.
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