A new refinery currently under construction in Nigeria could greatly reduce the export of domestic crude oil, a mainly Suezmax trade, but start new trade routes for product tankers.
In what appears to be a unique piece of research, Poten Tanker Research and Consulting Team has analysed the impact of the Dangote Oil Refinery, which is under construction in the Lekki Free Zone on Nigeria’s coast, and is owned by Aliko Dangote, the wealthiest person in Africa.
The state oil company Nigerian National Petroleum Corporation (NNPC) has announced it will supply 300,000 barrels per day (b/d) of crude oil to the new 650,000 b/d refinery.
As Poten pointed out, the Dangote start up (expected in 2022) and access to 300,000 b/d will have a significant impact on crude oil exports.
“In 2019, Nigeria exported about 2M b/d, with about 900,000 b/d (45%) going to Europe and a further 178,000 b/d to the US east coast. The rest was exported to Asia (545,000 b/d) while smaller volumes went to the US west coast.”
The tanker of choice is the Suezmax, taking 75% of the market share, with VLCCs at 25%.
Another loser will be the product tanker sector. “The 650,000 b/d refinery will be able to meet 100% of Nigeria’s refined product needs,” said Poten.
It added, “In recent years (2019-2021), Nigeria imported on average some 470,000 b/d of refined products of which 350,000 b/d was gasoline. This import trade will likely disappear when the new refinery starts operating. While Dangote may generate some export business, the net effect on the product tanker trades will be negative.”