A new massive refinery under construction in Nigeria is set to change the West African tanker trades with suezmaxes likely the big losers.
Last week, the Nigerian National Petroleum Corporation (NNPC) announced that it will supply 300,000 barrels per day of crude oil to the new 650,000 barrels per day Dangote oil refinery, which is under construction in the Lekki Free Zone on Nigeria’s coast, approximately 30 miles east of the commercial capital of Lagos.
“When it is commissioned, the Dangote refinery, Africa’s largest, will dramatically change the crude oil and refined product balances in Nigeria and the wider West Africa region. This will also have a major impact on the tanker market,” a new report from tanker brokers Poten & Partners explained.
The Dangote refinery is the brainchild of Nigerian businessman Aliko Dangote, the wealthiest person in Africa.
According to Dangote’s website, the huge refinery will be able to meet 100% of Nigeria’s refined product needs and will have a surplus available for export. The company claims that the plant will yield 327,000 barrels per day of gasoline, 244,000 barrels per day of gasoil/diesel, 56,000 barrels per day of jet fuel/kerosene, as well as 290,000 tons per year of propane/LPG when fully operational.
Suezmaxes have accounted for 75% of Nigeria’s crude exports in recent years, while for products, the impact of the new refinery will be felt on both the LR1 and the MR/handysize segments with imports set to fade.
“While the new refinery being built in Nigeria could be good for the country, the simultaneous demise of crude exports and product imports will be a loss for the Atlantic Suezmax and LR1/MR product tanker trades,” Poten concluded.