October 3, 2024

A Belgian law restricting exports of low-quality fuels and financial constraints among Nigeria’s importers are squeezing sales of gasoline from Northwest Europe to West Africa, leaving buyers to explore other options until Nigeria’s Dangote refinery is able to meet demand.

The Belgian legislation, which came into effect on Sept. 14, tightens the permitted sulphur content of road fuel exports to 50 parts per million, three times stricter than the current Nigerian limit. It brings Belgium into line with the Netherlands, which introduced a similar law last year.

Gasoline exports from the Amsterdam-Rotterdam-Antwerp (ARA) hub region to West Africa fell to about 150,000 barrels per day (bpd) in September, Kpler data shows, the lowest since May 2020 in the early days of the Covid pandemic.

Exports from Belgium to West Africa were at their lowest since December 2020 at about 90,000 bpd, while exports from the wider EU and UK region touched a one-year low of 250,000 bpd in September, the data shows.

Any shortfall from the loss of ARA blending in Nigeria is likely to be temporary, as production from the country’s 650,000 bpd Dangote refinery ramps up. However, it is still unclear when the plant will be able to fully meet domestic demand.

“It could be several months away until gasoline production reaches a meaningful level to meet Nigerian domestic demand, therefore in the interim, I can see a case for Europe to supply gasoline,” said Pamela Munger, lead market analyst at Vortexa.

However, analyst Winston Swomley said West African buyers were not expected to pay more for higher-quality gasoline, with the credit lines necessary to enable foreign currency payments difficult to secure.

“As such, West Africa-grade blending is likely to shift from ARA to other locales.”

Financial constraints also hindered any last-minute rush of higher-sulphur grade purchases from Belgium before the legislation was implemented, Ronan Hodgson of energy consultancy FGE said.

Malta – which has no oil refineries – loaded around 20,000 bpd of gasoline for West Africa in July and August, compared with around 4,000 bpd during the first half of the year, according to Kpler.

Exports from Spain to West Africa averaged around 35,000 bpd this year, nearly four times higher than last year’s levels, Kpler data shows.

REUTERS