Nigeria: Dangote refinery ships first cargo to Europe

BP is currently transporting its first jet fuel cargo to Rotterdam from Dangote, having won part of a 120,000-tonne tender launched at the end of May, according to four market sources.

Two sources confirmed that the vessel Doric Breeze had marked BP's first cargo, loading 45,000 tonnes of supplies from Lekki on May 27, according to data from S&P Global Commodities at Sea.

Cepsa also won part of the tender, with the Spanish refiner due to deliver supplies to the continent shortly, traders said.

Neither company was available to comment on the refinery's jet fuel purchases, while a Dangote representative had previously confirmed to S&P Global Commodity Insights that the refinery has been compliant with European jet A1 standards since the product began shipping to Africa in April.

The first European shipment demonstrates the growing reach of products from Dangote's 650,000 b/d refinery, as it rapidly ramps up operations and aims to disrupt established trade flows in West Africa.

Dangote exported six cargoes of jet fuel/kerosene as of April 8, all delivered to Senegal, Togo or Ghana, according to CAS data. BP is also expected to continue supplying jet fuel to the West African market with products from the refinery, sources said.

European traders have warned that new jet fuel flows could exacerbate existing weakness as Nigerian supply makes its way into a highly saturated market. According to Commodity Insights' Platts assessments, northwest European CIF jet fuel cargoes reached a $52/tonne premium to the May 29 first-month ICE LSGO contract, down $3.25/tonne on the day and $11.25/tonne on the week.

With abundant supply weighing on the European market, the arbitrage window from the Persian Gulf was firmly closed.

The spread between the June and July CIF NWE contracts is moving towards a contango of minus $1.50/tonne on May 29. The contango structure, reflecting rapid market weakness, was last assessed lower on April 25, when Platts assessed the second-month contract at $1.75/tonne. premium in millions over the first-month equivalent, according to Commodity Insights data.

Export changeover

The refiner's export portfolio could soon be overhauled as it pursues ambitious schedules for new unit ramp-ups.

To date, Dangote has exported naphtha, fuel oil and gasoil to markets in Europe, Africa and Asia, although naphtha exports may soon be reduced in preparation for gasoline production, a Dangote representative told Commodity Insights on May 20.

Dangote has been seen transporting around four cargoes of naphtha to Europe every month since April, although volumes could soon be reduced to increase domestic supply of gasoline blending, once the plant's fluid catalytic cracker is operational.

Dangote now expects its first gasoline supplies to begin in June, a spokesman said on May 20, a date revised from the previous May deadline. Meanwhile, the refiner aims to produce ultra-low sulfur diesel eligible for export to Europe by the third quarter, a Dangote representative said in April.

Analysts at Commodity Insights maintained their forecast that gasoline supply to the refinery would not begin until the third quarter, with the plant expected to reach steady-state utilization around 2027.

At steady state, Dangote is expected to produce 9% jet fuel, equivalent to around 45,000 b/d at 80% utilization, although initial supplies from the refinery could make Nigeria a net exporter of jet fuel for the first time as soon as possible.