…Dangote Refinery remained tight-lipped on progress.
The Nigerian economy may dip into further contraction as a wave of strikes in Europe could lead to more tightening of diesel markets and weaken crude oil market.
This coupled with the uncertainty that surrounds the completion of Dangote Refinery is bound to create an atmosphere of uncertainty for the Nigerian economy.
The startup of the much-delayed 650,000bl/d Dangote refinery is critical to Nigeria’s energy and economic fortunes. The lack of a functioning refining sector means the country’s finances remain burdened by huge public expenditure on fuel imports and subsidies, particularly gasoline, much of which is sourced in Europe around the ARA refining hub.
But the gap between optimistic official statements and downbeat analyst projections means continued uncertainty over the political and business elite’s trade-rebalancing hopes.
Despite some bullish statements from the Nigerian government, the Dangote conglomerate has remained tight-lipped on the project’s progress.
The Nigerian economy relies heavily on diesel for operational activities. European markets are major sources of diesel for the Nigerian economy.
The Russian-Ukrainian war has already led to high cost of energy in all areas of Nigeria’s social and economic life. It is believed that more strikes as it being currently witnessed in France will further harm the Nigerian economy. Prices of goods and services are already impacted negatively.
Nigeria’s budget depends solely on foreign earnings from crude oil and if this situation is endangered, it means the country which is already grabbling with high unemployment rate would have its economy distressed the more.
French refineries process about a million barrels per day, or just over 8% of the EU’s total throughput, IEA data shows, and the country’s crude oil imports have sagged to 550,000 bpd in March, down 50% from February, Kpler data shows. This has created slack in the crude oil markets—specifically of North Sea and Nigerian crude oil grades.
Striking action in France’s refineries is poised to tighten European diesel markets, while crude oil markets are looking weaker, traders who spoke to Reuters said on Monday.
France has been battling strikes in its crude oil refineries as union members’ pension system is due to be overhauled. The strikes have so far blocked shipments of refined products from France’s Donges and La Mede refineries and have reduced the throughput at the Normandy and Feyzin refineries.
The curtailments have resulted in less feedstock demand—i.e., weaker crude oil demand, while threatening to tighten up the end product markets such as diesel.
ICE low-sulfur diesel contracts rose on Monday to a premium of $35.25 a barrel—the highest level since November last year, with the profit margins for diesel in the EU climbing 40% over the last month.
French refineries process about a million barrels per day, or just over 8% of the EU’s total throughput, IEA data shows, and the country’s crude oil imports have sagged to 550,000 bpd in March, down 50% from February, Kpler data shows. This has created slack in the crude oil markets—specifically of North Sea and Nigerian crude oil grades.
“WTI cargoes for May delivery compared with April are down by $1.50-$2/bbl, because of that, North Sea is having to price lower to compete,” a trader told Reuters.
Meanwhile, in the UK, striking action from Union Unite, encompassing 1,400 offshore workers at contractor companies, is set to halt oil and gas platforms in the UK’s North Sea, including the platforms of BP, Shell, TotalEnergies, Harbor Energy, and more. Unite workers are demanding a better deal on jobs, pay, and conditions. The Union cited the companies “enjoying record-busting profits,” and forecast that platforms and offshore installations would be brought to a “standstill” due to the striking action.
