Dangote refinery is a game changer for West African, Atlantic Basin product balances

The Dangote refinery is one of the most important downstream projects of the last decade globally. It is one of the largest ever built and stands out against the trend of refinery closures on the African continent.

The startup of the refinery has gone smoothly so far, but all eyes are on West Africa as commissioning of the final process units gets underway in the first half of 2025.

As crude processing ramps up, refined product balances will shift, with Nigeria becoming much less reliant on gasoline imports and becoming a net exporter of diesel. This in turn will alter long-established trade patterns in the Atlantic Basin and usher in a new era for the region’s refiners and traders.

Nigerian spot price differentials uncertain as flows change

The Western African (WAF) crude market will see significant changes in dynamics in 2025, as more Nigerian crudes are expected to be fed into Nigeria’s Dangote refinery, reducing the region’s export availability.

Meanwhile, robust crude production growth in the Americas, particularly in the US, Brazil and Guyana, will tilt the supply balance of the Atlantic basin further by competing with WAF crudes for outlets not only in traditional markets such as Europe but also close to home in Africa.

The flux creates uncertainties in spot differentials of Nigerian crudes as potentially lower export availability dampens their attractiveness to traditional buyers such as European and Asian refiners.

The ramp-up of Dangote’s residue fluid catalytic cracking (RFCC) unit will reduce the WAF region’s gasoline short, denting gasoline crack in the Atlantic Basin, and in turn, putting a cap on spot differentials of crudes favored for gasoline production.

African exporters hope for production growth in 2025

• Nigeria and Angola, the two largest LNG exporters in Sub-Saharan Africa, have faced feedstock challenges in recent years due to insufficient investment, lower oil production and security concerns. ​
• In Nigeria, a joint effort by the government, security agencies and IOC partners yielded positive, albeit inconsistent, production results in 2024. This recovery in feedstock is expected to continue into 2025 as stakeholders focus on resolving security issues. ​
• In Angola, project partners are preparing to boost output by integrating nonassociated gas into the Angola LNG plant this year, significantly boosting available feedstock. ​
• Additionally, growth is anticipated from new exporters, with two countries poised to start LNG exports for the first time, when Greater Tortue Floating LNG, located on the border between Senegal and Mauritania, commences operations in early 2025.

Gas monetization via LNG export and domestic supply can drive transformational economic growth

• African countries are seeking to accelerate the development of gas resources for export and domestic use. Congo, Mozambique and Senegal are among new gas producers grappling with the necessary regulations to promote gas-driven power expansion and industrialization, while Angola and Nigeria are looking to gas to diversify away from oil.
• Mozambique is a case in point for the vast economic opportunities presented by gas. The country currently faces political instability and debt issues, along with one of the fastest-growing populations and the highest youth unemployment rates in Sub-Saharan Africa.
• However, S&P Global Market Intelligence forecasts that Mozambique’s real GDP per capita could surpass $1,000 by 2032, assuming LNG sector expansion overcomes current aboveground challenges.
• LNG development is crucial to increasing tax revenues, promoting a more stable debt trajectory and reducing income inequality, provided that inclusive growth is prioritized over the medium to long term.

Domestic resources could be key complement to renewables in boosting power access and meeting demand

• In 2024, Africa’s power demand is expected to grow by about 3%, up from less than 1% in 2023. This positive trajectory is predicted to strengthen further, with projections indicating a compound annual growth rate (CAGR) exceeding 3% over the next five years.
• However, in many Sub-Saharan African countries, less than half of the population has access to electricity. African governments will remain focused on enhancing electricity access while meeting demand driven by population and economic growth.
• Suppressed demand in Africa stems from reliance on costly imported energy and inefficient infrastructure. Effective power distribution needs investment in both new generation and power networks, along with sufficient financing and cross-border collaboration.
• Gas resources in countries such as Angola, Namibia and Senegal can feed power generation expansion alongside renewables projects, which are faster and cheaper to deploy. This strategy could underpin industrialization and economic growth via reliable power supply and efficient resource use.