The Organisation of Petroleum Exporting Countries (OPEC) has announced that the commencement of operations at Nigeria’s Dangote refinery and Mexico’s Dos Bocas refinery will significantly impact refining plants in the United States and Europe. Previously, these countries, along with other African nations, were primary markets for premium motor spirit (PMS), commonly known as petrol, refined in the U.S. and Europe.
According to Vanguard’s findings, the Dos Bocas refinery has a processing capacity of about 340,000 barrels per day (bpd), enabling Mexico to achieve self-sufficiency in refined petroleum products. Meanwhile, the Dangote Oil Refinery boasts a capacity to process 650,000 bpd, positioning it to meet demands across Nigeria and West African markets.
In its latest 2024 World Oil Outlook, OPEC stated, “New mega-projects are poised to alter the international downstream market. The start-up of the Dangote refinery and the upcoming commercial operation of the Dos Bocas refinery could significantly affect the gasoline market in the Atlantic basin.”
While both regions currently import substantial volumes of gasoline from the international market, this scenario may change as these two refineries reach full operational capacity, potentially leading to negative consequences for U.S. and European refineries amid stagnant gasoline markets.
The report also noted that trade dynamics in the downstream market are heavily influenced by geopolitical factors. The EU’s embargo on Russian crude and product exports has shifted interregional oil flows, resulting in EU refiners increasing crude oil imports from the U.S. and the Middle East. Additionally, EU product imports of non-Russian origin have surged, particularly from India, the U.S., and the Middle East. Newly commissioned plants in the Middle East, such as those in Jizan, Saudi Arabia, and Duqm, Oman, have also begun exporting diesel to the EU.
In light of the OPEC report, NJ Ayuk, Executive Chairman of the African Energy Chamber, remarked, “Nigeria is starting to emerge as a key player in the global trade of middle distillates and light ends. The Dangote refinery will soon rival the largest refining sites in the U.S. and is over 50% larger than Europe’s biggest refinery. While ramping up refinery operations can present challenges and delays, once the site operates at full capacity, it will transform fuel markets in the West African region and alter trade flows in Europe. In other words, Nigerian refined products will soon be making their way into Northwest Europe, traditionally an exporter.”