Day: August 9, 2024

The Organisation of Petroleum Exporting Countries (OPEC) has said supplies from Nigeria-based world’s largest single-train Dangote Refinery and Petrochemicals will put pressure on the performance of Europe’s oil industry, especially the Northwest Europe (NWE) Gasoil.

OPEC in its newly released monthly Oil Market Report for June 2024 listed Dangote Refinery among the top Diesel and jet Fuel suppliers that will disrupt Europe’s oil & gas Industry, a development experts forecasted will positively impact the Nigerian economy.

Recall that Standard & Poor Global quoting trading and the ship tracking sources had earlier predicted that Nigeria’s $20 billion Dangote refinery would shake up international crude flows when it reaches full capacity, having already made an impact since coming online in January, trading sources and ship tracking data show.

The OPEC report revealed that “Upside potential for higher production levels from Nigeria’s Dangote refinery, coupled with strong flows from the Middle East and new supplies from the Mexican Olmeca refinery, will likely exert pressure on NWE gasoil performance in the mid-term.”

It stated further “Europe is one of the world’s largest purchasers of refined petroleum products and relied on imports from Asia and the US after the European Union banned the use of Russian diesel in the bloc.

However, the 650,000bpd capacity refinery which is owned by the Africa’s richest man, Aliko Dangote, is eyeing the wider European market after International Oil Companies stopped supplying its crude oil.

Vice President of Oil and Gas at Dangote Industries Limited, Devakumar Edwin announced the company had earlier exported its first jet fuel cargo to Europe as it rapidly scales production.

The refinery is said to have exported 90 percent of its 3.5 billion litres of jet fuel and diesel to Europe over alleged lack of support from the Nigerian government.

“It is good to note that from the start of production, more than 3.5 billion litres, which represents 90 percent of our production, have been exported,” Edwin said

BP is currently transporting its first jet fuel cargo to Rotterdam from Dangote, after being awarded part of a 120,000 metric tonnes tender offered for the end of May, according to S&P Global.

OPEC stated that, “In June, the jet/kerosene crack spread in Rotterdam against Brent showed a slight decline, influenced by supply-side dynamics. Despite signs of improving air travel activities, subdued jet fuel demand from the aviation sector weighed on the product market.

“Going forward, European jet/kerosene demand is expected to see upward pressure as consumption levels from the aviation sector continue to pick up in the coming months.”

S&P had noted that Dangote Refinery in its first six months, scaled to 400,000 b/d and delivered diesel, jet fuel, naphtha, and fuel oil to both domestic and export markets, with Gasoline, Nigeria’s primary fuel type, being expected to be produced from mid-August

Notwithstanding, the refinery has already affected crude flows, with dozens of Nigerian cargoes remaining in-country and US WTI Midland, a comparable light, sweet grade, being imported

The mega-refinery could therefore tighten the light, sweet crude market. “Its diet is WTI and the lighter Nigerian [crudes] so if you were chasing those barrels you’d probably feel it quite keenly,” a West African crude trader told Commodity Insights. “Once they get to 650,000 b/d without any WTI Midland, ‘severely disrupted’ [will be] the headline.”

WTI Midland crude initially emerged as the favored feedstock to supplement Nigerian supply, with the refinery signing long-term supply contracts for the US grade and noting its competitive pricing. Platyts, part of Commodity Insights, last assessed WTI Midland into Rotterdam at $82.36/b on July 31, while Nigeria’s Bonny Light was assessed at $82.80/b on the same day.

Crude flows in and out of the Dangote refinery have been felt in other markets, especially in Europe, the largest consumer of light, sweet Nigerian crude. The US grade has accounted for 30% of crude delivered to Dangote, through 18 cargoes

President of Dangote Group, Aliko Dangote, said the facility would broaden its feedstock sources with Libyan, Angolan, and Brazilian crude.

“The refinery was built to use Nigerian crude and add value to it within Nigeria. Why should we deviate from that focus?” said Dangote, adding that the crude supply issues were “getting resolved”, but that the refinery remained open to all opportunities “to supplement it”.

“Dangote refinery is designed to process a range of light and medium grades of crude oil, including Nigerian grades,” said Rasool Barouni, Associate Director and head of Refining at S&P Global Commodity Insights. “Other similar grades including other WAF grades could be an option.”

Nigeria is sub-Saharan Africa’s largest oil producer, pumping 1.5 million b/d in June, according to the Platts OPEC Survey from S&P Global Commodity Insights.

Source: https://dailytrust.com/20bn-dangote-refinery-will-disrupt-europes-oilgas-industry-opec/

The Independent Petroleum Marketers Association of Nigeria (IPMAN) has announced that the Port Harcourt refinery is on track to meet its August deadline for producing petroleum products and will be able to supply 10 to 12 million liters of petrol to marketers. 

The National Operations Controller of IPMAN, Zarma Mustapha, made this statement in an interview with Channels TV on Thursday.  

Mustapha said the refinery will boost the supply of petroleum products in the country to about 11 to 15 million liters daily, and help ensure energy availability across the board.

According to him, the refinery is set to operate independently and sell at the prevailing market price with little or no government interference.  

“There is this understanding that the Port Harcourt refinery is going to perform independently and sell at whatever prevailing market price for them to recover their cost. 

“It is not going to be run like a government entity as it has been before. I believe that the refinery coming up, will really boost the demand and supply of PMS to nothing less than 11 to 15 million litres daily. 

“I am confident and optimistic that this August deadline is going to be a realistic deadline. It will come on stream and fully produce all the necessary components that the refinery is supposed to produce. At least, at its capacity of 0,000 barrels, can give you 10 to 12 million litres of PMS,” he said. 

Price Reduction of PMS 

Commenting on whether the refinery will help reduce the price of petrol in the country, Mustapha said that might be the case if the operators decide to sell at a subsided rate.  

He, however, explained that the refinery has to recover its cost of operation, particularly the $1.5 billion loan it obtained from a creditor for its maintenance in 2021.  

Accordingly, the spokesperson of the marketer said since the operators are also buying crude at an international price, they will have to recover their cost also. 

“It depends on how much they are willing to sell. How much did they get the crude? Because they’re buying the crude at an international price too.  They have to pay back the loan they took also.  

“The $1.5 billion is a loan they took from one of these African financial institutions. I don’t know which one among them. They took the loan with the promise of paying back with whatever recoup from the earnings of the refinery,” he added. 

What you should know 

Despite being an oil-producing nation, Nigeria does not have a working public refinery. The country has four state-owned refineries, which are located in Port Harcourt, Kaduna, and Warri.   

The lack of functional refineries has forced Nigeria to rely heavily on imported refined petroleum products, which has had a significant impact on the country’s economy.   

NNPC boss, Mele Kyari, recently assured that the Port Harcourt refinery will commence operations this August. He also stated that the other three refineries in Kaduna and Warri would start operations in the second half of 2025.   

This announcement comes as part of the government’s ongoing efforts to revitalize the nation’s refining capacity and reduce dependence on imported petroleum products.  

However, there are doubts about this pronouncement because this is not the first time Kyari has made such a projection. Previous deadlines for the resumption of refinery operations have not been met, leading to skepticism about the feasibility of the current timeline. 

Source: https://nairametrics.com/2024/08/08/port-harcourt-refinery-will-produce-12-million-liters-of-petrol-daily-to-begin-operation-this-month-marketers/

The Organisation of Petroleum Exporting Countries has said supplies from Nigeria-based world’s largest single-train Dangote Refinery and Petrochemicals will put pressure on the performance of Europe’s oil industry, especially the Northwest Europe Gasoil.

OPEC in its newly released monthly Oil Market Report for June 2024 listed Dangote Refinery among the top Diesel and jet Fuel suppliers that will disrupt Europe’s oil & gas Industry, a development experts forecasted will positively impact the Nigerian economy.

Recall that Standard & Poor Global quoting trading and the ship tracking sources had earlier predicted that Nigeria’s $20 billion Dangote refinery would shake up international crude flows when it reaches full capacity, having already made an impact since coming online in January, trading sources and ship tracking data show.

The OPEC report revealed that, “Upside potential for higher production levels from Nigeria’s Dangote refinery, coupled with strong flows from the Middle East and new supplies from the Mexican Olmeca refinery, will likely exert pressure on NWE gasoil performance in the mid-term.”

It stated further “Europe is one of the world’s largest purchasers of refined petroleum products and relied on imports from Asia and the US after the European Union banned the use of Russian diesel in the bloc.’’

However, the 650,000bpd capacity refinery which is owned by the Africa’s richest man, Aliko Dangote, is eyeing the wider European market after International Oil Companies stopped supplying its crude oil.

Vice President of Oil and Gas at Dangote Industries Limited, Devakumar Edwin, announced the company had earlier exported its first jet fuel cargo to Europe as it rapidly scales production.

The refinery is said to have exported 90 percent of its 3.5 billion litres of jet fuel and diesel to Europe over alleged lack of support from the Nigerian government.

“It is good to note that from the start of production, more than 3.5 billion litres, which represents 90 percent of our production, have been exported,” Edwin said

BP is currently transporting its first jet fuel cargo to Rotterdam from Dangote, after being awarded part of a 120,000 metric tonnes tender offered for the end of May, according to S&P Global.

OPEC stated that, “In June, the jet/kerosene crack spread in Rotterdam against Brent showed a slight decline, influenced by supply-side dynamics. Despite signs of improving air travel activities, subdued jet fuel demand from the aviation sector weighed on the product market

“Going forward, European jet/kerosene demand is expected to see upward pressure as consumption levels from the aviation sector continue to pick up in the coming months.”

S&P had noted that Dangote Refinery in its first six months, scaled to 400,000 b/d and delivered diesel, jet fuel, naphtha, and fuel oil to both domestic and export markets, with Gasoline, Nigeria’s primary fuel type, being expected to be produced from mid-August

Notwithstanding, the refinery has already affected crude flows, with dozens of Nigerian cargoes remaining in-country and US WTI Midland, a comparable light, sweet grade, being imported

The mega-refinery could therefore tighten the light, sweet crude market. “Its diet is WTI and the lighter Nigerian [crudes] so if you were chasing those barrels you’d probably feel it quite keenly,” a West African crude trader told Commodity Insights. “Once they get to 650,000 b/d without any WTI Midland, ‘severely disrupted’ [will be] the headline.”

WTI Midland crude initially emerged as the favored feedstock to supplement Nigerian supply, with the refinery signing long-term supply contracts for the US grade and noting its competitive pricing. Platyts, part of Commodity Insights, last assessed WTI Midland into Rotterdam at $82.36/b on July 31, while Nigeria’s Bonny Light was assessed at $82.80/b on the same day.

Crude flows in and out of the Dangote refinery have been felt in other markets, especially in Europe, the largest consumer of light, sweet Nigerian crude. The US grade has accounted for 30 per cent of crude delivered to Dangote, through 18 cargoes

President of Dangote Group, Aliko Dangote said the facility would broaden its feedstock sources with Libyan, Angolan, and Brazilian crude.

“The refinery was built to use Nigerian crude and add value to it within Nigeria. Why should we deviate from that focus?” said Dangote, adding that the crude supply issues were “getting resolved”, but that the refinery remained open to all opportunities “to supplement it.”

“Dangote refinery is designed to process a range of light and medium grades of crude oil, including Nigerian grades,” said Rasool Barouni, Associate Director and head of Refining at S&P Global Commodity Insights. “Other similar grades including other WAF grades could be an option.”

Nigeria is sub-Saharan Africa’s largest oil producer, pumping 1.5 million b/d in June, according to the Platts OPEC Survey from S&P Global Commodity Insights. Until this year, all of its oil was exported due to the lack of refining capacity, with gasoline, diesel, and jet fuel imported for domestic use.

Source: https://gazettengr.com/dangote-refinerys-diesel-jet-fuel-supplies-to-disrupt-europes-oil-gas-industry-opec/