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Dangote Refinery Set to Disrupt Oil Markets with U.S. Imports

Transformational Impact Expected as Operations Commence

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As the 650,000 barrels per day Dangote Petroleum Refinery gears up for production, it’s seizing the opportunity of cheaper oil imports from the United States, marking a significant shift in Nigeria’s fuel market dynamics, according to a report by Bloomberg.

Analysts anticipate that Dangote’s entry into the market will have a profound impact, particularly with its gasoline output expected to reshape the West African gasoline supply balance.

Alan Gelder, Vice President of Refining, Chemicals, and Oil Markets at Wood Mackenzie, emphasized the refinery’s potential influence on the Atlantic Basin gasoline markets, particularly once the residue fluid catalytic cracking unit (RFCC) comes online.

Despite currently operating at around 300,000 barrels per day, roughly half its nameplate capacity, Dangote has already begun shipping jet fuel, gasoil, and naphtha, with plans to expand its product slate further.

While some analysts anticipate the gasoline-focused units to be operational this summer, others suggest it might take until the end of the year for the RFCC to be fully functional.

Meanwhile, Dangote Industries recently announced a reduction in diesel prices, signaling its strategic positioning in the downstream oil sector.

Bloomberg’s report highlighted that up to a third of the oil supplied to the refinery has been U.S.-grade WTI Midland, underscoring the refinery’s flexibility in sourcing feedstock. This trend might persist as long as foreign oil remains competitively priced compared to local supplies.

However, Nigeria’s recent regulatory changes, mandating oil producers to prioritize domestic refineries and allowing them to purchase crude in local currency, signal a shift in the country’s energy policy.

As Dangote Refinery progresses towards full-scale operations, its strategic imports and competitive pricing strategies are poised to reshape not only Nigeria’s fuel market but also the broader dynamics of the Atlantic Basin gasoline markets

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