Following the recent decision to expand the planned capacity at the Dangote refinery to 650,000 barrels per day (bpd), the completion of the project could herald a major cut in West Africa’s fuel imports from 2018.
West Africa consumes an estimated 649,000 bpd but imports about 550,000 bpd, nearly 85 percent of its consumption. This is largely due to the low capacity utilisation at the Nigerian refineries, which have functioned at less than 20 percent of their combined installed capacity of 445,000 bpd since 2012. Ghana’s refineryhas also been shut-down following technical issues that may prevent its re-opening till Q3 2015.
Furthermore, efforts to expand capacity at the SIR in Cote d’Ivoire are being constrained by financing difficulties. However, the Dangote refinery could cover this shortfall in refining capacity and reduce or totally fulfil the region’s import needs. Dangote’s refinery however faces strong competition from European and US refiners who have intensified efforts to lock in key markets in the region over the last few months. The refinery is expected to source its crude oil supply locally, but may also take in crude oil from other countries if they offer better refining economics.