The second quarter saw a 56% decrease in the average monthly imports of gasoline into West Africa, according to statistics from Refinitiv Eikon.
According to Refinitiv statistics, June loadings from the Amsterdam-Rotterdam-Antwerp hub to West Africa decreased to 629,000 tonnes from 895,000 tonnes in 2017.
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Loadings decreased from 1.5 million tonnes in July of last year to 627,000 tonnes in July of this year.
“The key point is that demand from West Africa is drying up,” said Refinitiv Lead Oil Analyst Raj Rajendran.
Since the removal of petrol subsidies on May 29, the demand for petrol from Nigeria has seen a reduction. Despite this decrease in demand, foreign refiners from Russia, the Middle East, and Europe are now in competition to increase their exports of refined petrol to Nigeria.
Last week, The PUNCH reported an 84% surge in the importation of petrol from Russia over the past year.
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Data obtained by The PUNCH from Argus on Nigeria’s gasoline European trade overview indicates a significant rise in the share of Russian petrol finding its way into Nigeria.
In 2023, the volume of Russian petrol imported to Nigeria has reached 24,000 barrels per day, compared to 3,700 b/d in 2022.
This increase in direct Russian gasoline flows into West Africa commenced in January, with cumulative volumes growing from almost negligible levels in recent years to approximately 800,000 tonnes year-to-date, as reported by Refinitiv Eikon data cited by Reuters. Despite the growth, the overall volumes remain relatively small for now.
“One of Europe’s main markets for gasoline has shrunk, threatening to squeeze European refiners, after Nigeria removed fuel subsidies, which destroyed much of the country’s domestic demand and a regional market for smuggled fuel.
“North America and West Africa, with Nigeria at the helm, historically have been the top two destinations for petrol exports from Europe, which produces more gasoline than it uses, meaning its refiners rely on exports to support profit margins.
“A steady decline in European refining margins in recent years, as competition from the Middle East, the United States and Asia grew, was reversed when fears of fuel supply shortages boosted profits after Russia’s invasion of Ukraine,” the report said.
According to Refinitiv Eikon data, benchmark profit margins for gasoline in northwestern Europe have remained steady at around $27 a barrel. These margins have been supported by factors such as demand from North America, a shortage of high-quality blending materials, disruption caused by low wave levels inland, and local refinery outages.
However, analysts anticipate that the reduction in petrol flows following the recent upheaval in Nigeria could add pressure on European refiners. The potential winners in this situation are likely to be newer Middle Eastern refineries.
Since the removal of subsidies, Nigeria’s petrol demand has reportedly declined by 28%. As a result, onshore gasoline stocks in the country have increased significantly, climbing to 960,000 tonnes from an average of 613,000 tonnes between January and June, as reported by Jeremy Parker of CITAC consultancy, which specializes in Africa’s downstream energy market.
Due to its inadequate domestic refining capacity, Nigeria heavily relies on petrol importation.