Crude oil shipments from the Middle East to Europe have increased significantly following the E.U.’s ban on Russian oil since April 2023, and as a result, surplus refined petrol ships from Europe are heading to Africa with Nigeria the major destination.
Analysts at S&P who revealed this in the latest Global Commodity Insights report, however cautioned that Nigeria’s petrol import from Europe is not expected to last long with full production from the 650,000-barrel Dangote refinery.
The analysts noted that European petrol exporters will have to find alternative destinations when that happens or reduce supply to Africa in general.
It stated, “Right now, the Europe gasoline surplus is heading to Africa, with Nigeria the largest importer, but that is not expected to last as increased production from Nigeria’s new 650,000 b/d Dangote refinery will mean reduced import demand in Nigeria and more supplies in Europe. European gasoline exporters will have to find alternative destinations or reduce runs or a combination of both.”
Nigeria has made concerted efforts in the past few years to reduce refined petroleum imports some of which have begun to bear fruit.
In 2021, the NNPCL decided to purchase a 20 per cent stake in the Dangote refinery for $1.036 billion.
Also, the NNPCL entered contracts to repair the state-owned refineries in Delta, Rivers and Kaduna. In December, phase 1 of the Port-Harcourt refinery was completed which will refine around 60,000 barrels of crude oil daily while the Delta and Kaduna refineries are at various stages of completion.
The 650,000-barrel capacity Dangote refinery began receiving crude oil for refining in December and started refining around February despite delays since its commissioning in May 2023.
Since the removal of the petrol subsidy in June, the federal government has sought to reduce the importation of crude oil as a measure to stabilize local prices and reduce forex demand on imports.
Meanwhile, for the second consecutive month, Nigeria failed to meet its monthly crude production quota of 1.5mbpd as stipulated by the Organisation of Petroleum Exporting Countries (OPEC) as the country’s crude oil production dropped to 1.32mbpd from the 1.42mbpd recorded in January 2024.
This represents a decline of 104,000 bpd in the country’s crude production.
This development was announced in the Monthly Oil Market Report (MOMR) of the oil cartel.
Nigeria had proposed an audacious daily crude oil production of 1.78 million barrels in its 2024 budget while OPEC pegged its production at 1.5 million barrels per day.
In January, the country was unable to meet neither its target nor OPEC’s quota as it could only produce 1.42mbpd. The figure fell to 1.32mbpd in February as the country continued to grapple with the menace of crude oil theft.
However, despite the decline in crude oil production, Nigeria still retained its position as Africa’s biggest oil producer among the continental members of OPEC.
