Dangote Refinery Has Begun to Disrupt Global PMS Market – OPEC

The Dangote Petroleum Refinery is fast becoming a game changer in the global and local energy markets, according to the latest report of the Organization of Petroleum Exporting Countries (OPEC).

With its impressive production capacity and high-quality petroleum products, the refinery has begun disrupting international fuel markets while gaining traction as the preferred supplier for Nigerian consumers.

OPEC, in its latest report, acknowledged that the refinery’s gasoline (petrol) exports are already weighing on the European PMS market.

“The ongoing operational ramp-up efforts at Nigeria’s new Dangote refinery and its gasoline (petrol) exports to the international market will likely weigh further on the European gasoline market.

“Continued gasoline production in Nigeria, a country that has relied heavily on imports to meet its domestic fuel needs in the past, will most likely continue to free up gasoline volumes in international markets which will call for new destinations and flow adjustments for the extra volumes going forward,” it said.

This shift has reduced Europe’s exports to Nigeria, creating challenges for European refiners who now face increased gasoline inventories and bearish market sentiment, especially during the winter season.

The $20 billion Dangote Refinery, located in Ibeju-Lekki, Lagos State, is Africa’s largest oil refinery and one of the largest in the world. Commissioned in January 2024, the facility boasts a refining capacity of 650,000 barrels per day (bpd), surpassing the capacities of the largest refineries in Europe. Designed to produce petrol, diesel, aviation fuel, and other derivatives, the refinery incorporates state-of-the-art technology to meet global standards in product quality and environmental compliance.

The refinery was built to reduce Nigeria’s longstanding reliance on imported fuel, which had not only strained the country’s foreign reserves but also resulted in supply vulnerabilities and inconsistent product quality. Years of fuel subsidies further exacerbated the issue, creating a financially unsustainable fuel market. The launch of the Dangote Refinery was expected to bring new hope for Nigeria’s energy self-sufficiency.

From its inception, the Dangote Refinery was expected to disrupt the international petroleum market. Its capacity, advanced production processes, and strategic location in West Africa positioned it as a formidable competitor to European and Asian refiners.

Domestically, the Dangote Refinery is emerging as the preferred supplier of petroleum products, both for its competitive pricing and high-quality output. Nigerian consumers, long accustomed to low-grade imported fuel, are beginning to notice the difference. The positive reviews are rolling in, with many expressing satisfaction with the refinery’s products.

One Nigerian, sharing their experience on social media, remarked: “The last fuel I bought from MRS has done almost 100km already, and the tank is still 3 quarters full. For a Ford that is normally a guzzler, this is a big deal. I’m happy and sad at the same time!”

This sentiment reflects the growing realization among Nigerians that locally refined fuel offers better performance and efficiency compared to imported alternatives.

Additionally, the Dangote Refinery has significantly reduced Nigeria’s dependency on imported PMS, easing pressure on the country’s foreign reserves. The refinery is also contributing to the country’s external trade balance by meeting a substantial portion of domestic demand and exporting surplus products. OPEC’s report confirmed that in the last quarter of 2024, Nigeria saw a marked decline in oil product imports, improving its external sector outlook.

Globally, the Dangote Refinery now ranks above Europe’s largest refineries. With a 650,000bpd capacity, it outpaces Shell’s Pernis refinery in the Netherlands (404,000bpd) and BP Rotterdam (380,000bpd), among others. This monumental capacity not only puts the refinery in a position of dominance in the African market but also signals its potential as a key exporter to markets in Europe, Asia, and beyond.