Communicator

Credit: Gunvor, Rotterdam refinery

By Jack Wittels and Alex Longley, November 22, 2024, Bloomberg

Gunvor Group is temporarily halting its Rotterdam oil refinery because it’s not making enough money, the latest sign that the continent’s plants are struggling to compete with upstarts in other parts of the world.

Effective Nov. 25, the so-called economic halt is due to a lack of prompt availability of commercially viable feedstock, the company said in a statement. Gunvor said it will “continue to monitor the situation and assess future resupply for the refinery in due course.”

With a processing capacity of 75,000 barrels a day, the plant is relatively tiny. Still, it joins a growing list of European refineries with plans to either halt or downsize, including the Wesseling and Gelsenkirchen plants in Germany and the Grangemouth facility in Scotland.

Europe’s refineries are under pressure from large, new plants, including in the Middle East and Africa, such as Nigeria’s giant new Dangote refinery. The rival fuelmakers can send what they make to Europe, and also compete for market share elsewhere in the world.

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LAGOS, Sept 2 –  Nigeria’s Dangote Oil Refinery has commenced gasoline processing after recent crude shortages caused delays, according to a company executive on Monday. The $20 billion facility, built by Nigerian billionaire Aliko Dangote on the outskirts of Lagos, started operations in January, initially producing products like naphtha and jet fuel.

With a massive capacity of 650,000 barrels per day, the Dangote Refinery is Africa’s largest and aims to reduce Nigeria’s heavy dependence on imported oil products, a costly burden for the country despite being a major oil producer.

“We are currently testing gasoline, and soon it will begin flowing into our product tanks,” said Devakumar Edwin, Vice President of Dangote Industries Limited. Edwin did not specify when
 the gasoline would reach the local market but confirmed that state oil firm NNPC Ltd, Nigeria’s sole gasoline importer, would exclusively purchase the gasoline. “If there are no buyers locally, we will export it, as we have done with our jet fuel and diesel,” he added.

The introduction of gasoline from Dangote’s refinery could significantly ease NNPC’s ongoing struggles to meet local fuel demand. Since January, NNPC has accumulated $6 billion in debt to oil traders for supply, hampering its ability to adequately serve the Nigerian market, where long fuel queues have persisted since July. Fuel prices have surged by 45% from the official rate of 617 naira ($0.3942) following the removal of subsidies last year.

“The timing of Dangote’s gasoline production is critical, especially given NNPC’s current challenges in securing imported supply due to financial constraints,” noted Clementine Wallop, Director for Sub-Saharan Africa at Horizon Engage, a political risk consultancy. She emphasized the need for NNPC to demonstrate transparency in its financial dealings as it begins to purchase from Dangote.

Despite being Africa’s leading oil producer, Nigeria imports almost all of its fuel due to years of neglect and underinvestment in its national refineries.

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