• Thursday, May 23, 2024
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Is the giant of Africa finally awakening?

Is the giant of Africa finally awakening?

By Adedeji Tejuoso

The traditional flow of gasoline exports, particularly across the Atlantic from Europe to Africa, is on the verge of a major shakeup. This transformation is being driven by the arrival of a new giant on the scene: Nigeria’s Dangote oil refinery, the largest in Africa. With its immense capacity, this refinery has the potential to not only reshape trade patterns but also rewrite the rules of the game for both established European refiners and emerging players like Nigeria. Get ready for a story of disruption, opportunity, and the rise of a new powerhouse in the global oil market.

Read also: Libya overtakes Nigeria to become top African oil producing country

The traditional gasoline trade from Europe to Africa, particularly West Africa, has been substantial, amounting to billions of dollars annually. However, the commissioning of Dangote oil refinery has the potential to disrupt this longstanding trade pattern. With a refining capacity of up to 650,000 barrels per day (bpd), Dangote refinery has the capability to meet Nigeria’s domestic demand and potentially export surplus gasoline, thereby reducing the need for European imports.

According to analysts and traders, European refineries, already facing challenges from heightened competition and declining margins, are at risk of further pressure due to the loss of the West African market. As much as 300-400,000 bpd of European refining capacity could be at risk of closure, primarily due to the anticipated oversupply of gasoline and subsequent margin compression. Refineries such as the UK’s Grangemouth and Germany’s Wesseling are particularly vulnerable, facing potential closures ahead of schedule.

For decades, a paradox plagued Africa’s largest oil producer: despite vast reserves, Nigeria has been heavily reliant on gasoline imports due to a lack of domestic refining capacity. But that’s all about to change. The arrival of the Dangote refinery, a game-changer in size and sophistication, marks a significant milestone on the path to self-sufficiency. This behemoth not only has the potential to meet Nigeria’s entire gasoline demand, but to completely flip the script and turn the nation into a net exporter. Imagine the possibilities: reduced reliance on foreign imports, a potentially significant boost to the economy, and a powerful symbol of Nigeria’s growing strength in the global oil market. The Dangote refinery isn’t just about bricks and mortar; it’s about a nation rewriting its energy future.

The Dangote refinery’s capacity to produce 53 million litres of gasoline per day positions Nigeria as a key player in the regional and global refining market. By capturing a significant portion of the West African market, Nigeria can leverage its refining capabilities to enhance its energy security and reduce trade deficits associated with gasoline imports.

What lies next? Could natural gas exports to Europe be on the horizon?

As the Dangote refinery reaches full capacity and begins exporting gasoline, attention turns to the next frontier: natural gas exports to Europe. Nigeria, endowed with abundant natural gas reserves, holds the potential to become a significant player in the global natural gas market. With the right infrastructure and strategic partnerships, natural gas exports to Europe could be the next chapter in Nigeria’s energy evolution, further solidifying its position as a rising power in the global energy landscape.

Read also: Nigeria loses top spot to Libya as oil output dips

The emergence of Nigeria’s Dangote oil refinery isn’t just a domestic win, it represents a paradigm shift in the global refining landscape. With Europe’s refineries potentially facing closures due to declining exports, Nigeria is poised to fill the gap. The Dangote refinery, upon reaching full capacity, will be a major gasoline exporter, reshaping trade dynamics and fundamentally altering the global market. This not only strengthens Nigeria’s position as a major oil producer but also unlocks significant economic benefits. The increased refining capacity will translate to job creation, infrastructure development, and a potential reduction in reliance on imported fuels. The Dangote refinery is a powerful symbol of Nigeria’s economic potential, and its impact will be felt not just domestically but across the globe.

 

Tejuoso is an oil and gas consultant.