The Dangote Refinery, with a capacity of 650,000 barrels per day, is set to commence the production of 10 ppm sulfur diesel (Ultra-Low Sulfur Diesel, ULSD) in the week starting June 17. Petrol production is expected to follow soon after, starting as early as July 10.
Production Timeline
Aliko Dangote, in an interview with Channels Television on June 11, confirmed the production dates. These timelines indicate a slight delay from the company’s earlier guidance, as outlined by Devakumar Edwin, the company’s vice president for oil and gas, in May. Edwin had previously projected diesel exports and local gasoline sales to begin within the month.
Quality of Diesel and Market Conditions
Dangote in his interview, noted issues with the offshore Lome diesel market, noting that West Africa has been a dumping ground for substandard oil products with sulfur content between 2,000 ppm and 3,000 ppm. He also promised that the Dangote Refiner would produce higher-quality diesel with just 10 ppm sulfur content.
Legislative and Market Support
During the same interview, Nigeria’s Senate President, Godswill Akpabio, commended the Belgian government for banning the export of low-quality fuels. Although Belgium only supplied 9% of Nigeria’s seaborne gasoil and diesel imports this year, this is a significant drop from 22% last year. On the other hand, Belgium has increased its share of Nigeria’s finished-grade gasoline imports to 35% this year, up from 29% in 2023.
Current Production and Pricing
The Dangote Refinery has been producing gasoil with a sulfur content of around 680-700 ppm for both local and international markets. Recent offers for gasoil loadings of at least 20,000 tons FOB Dangote were priced at a discount of $30-$35 per ton against front-month ICE gasoil futures. This is in stark contrast to the Northwest European market, where 30,000-ton FOB ARA cargoes were assessed at a mere $1 per ton discount against front-month ICE gasoil futures.
Pricing Challenges
The substantial discount on gasoil loadings from Dangote reflects stricter pricing terms. These include upfront payments instead of letters of credit and payments made in US dollars rather than the local naira currency.
Gasoline Production and Naphtha Exports
Petrol production at the Dangote Refinery is scheduled to begin between July 10 and 15, as confirmed by Aliko Dangote. Since the start of crude processing in January, the absence of gasoline production has led to exports of 720,000 tons of naphtha, a key gasoline blending component, according to Kepler.
Storage and Capacity
The refinery is equipped with three straight-run naphtha tanks with a combined capacity of 90,000 m³, three hydrotreated heavy naphtha tanks with a combined 90,000 m³ capacity, and three hydrotreated light naphtha tanks with a total capacity of 30,000 m³, as reported by sources.
Conclusion
The Dangote Refinery is set to significantly impact the oil product market in West Africa by providing higher-quality diesel and gasoline. Despite initial delays, the commencement of ULSD and petrol production marks a significant step in improving fuel standards and market dynamics in the region.
