Dangote oil refinery could slash the annual $17 billion gasoline importation from Europe to Africa, placing additional stress on European refineries threatened by rising competitive forces.
The refinery which cost $20 billion to build, started production in January, It can refine up to 650,000 barrels per day and will be the largest in Africa and Europe when it reaches full capacity, according to Reuters.
Consultancy FGE’s head of refined products, Eugene Lindell, said; “The loss of the West African market will be problematic for a small set of refineries that do not have the kit to upgrade their gasoline to European and U.S. specification,” referring to more stringent environmental standards for other markets.
According to Kpler’s analyst Andon Pavlov, As much as 300-400,000 bpd of refining capacity in Europe is at risk of closure because of rising global gasoline production.
Pavlov, said “UK’s Grangemouth and Germany’s Wesseling refineries could close ahead of schedule as a result of looming gasoline oversupply later this year and consequent pressure on refining margins.”
Coastal refineries that are modelled for exports will be more exposed, while inland refineries will be less vulnerable because of their reliance on local demand, according to a European refinery executive who did not wish to be identified.
“The changes won’t happen overnight, but they could ultimately lead to closures of refineries and their conversion to storage terminals,” he added, referring to the challenging market environment.
One of the reasons for Petroineos’s decision to close its Grangemouth plant next year is an energy transition that has resulted in a decline in demand for oil, according to chief executive Franck Dema.
Around 30 European refineries have shut down since 2009, according Concawe data, With almost 90 plants of all sizes and complexity still operating.
Europe’s refineries are producing insufficient diesel to meet local needs, but they also produce a large amount of gasoline and use exports to offset excess supplies.
The West African region has been a major market of gasoline which is not subject to more stringent environmental regulations like in Europe on sulphur and metal content.
