The Dangote Petroleum Refinery has shielded Nigerian consumers from rising global fuel prices by keeping domestic petrol prices stable despite increasing international gasoline prices, higher freight costs and tightening global fuel supplies.
This was contained in the latest market intelligence by S&P Global Commodity Insights.
According to the report, fuel importers supplying the Nigerian market are coming under growing pressure as international gasoline prices continue to rise, driven by stronger global product prices and increasing shipping costs.
However, market participants told S&P Global that Dangote Refinery’s pricing has effectively prevented importers from passing the higher costs on to Nigerian consumers.
It stated that gasoline prices in Nigeria are effectively being “capped by Dangote prices”, making it difficult for importers to raise prices despite mounting international cost pressures.
It said one trader told it that while gasoline meeting Ghana’s fuel specification is attracting higher premiums, Nigerian specification cargoes remain under pressure because Dangote Refinery has maintained its coastal sales prices.
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“Lomé values have risen above Dangote sales prices, which has shut the arbitrage,” the trader was quoted as saying, indicating that fuel imports into Nigeria have become increasingly uneconomic under current market conditions.
S&P Global also reported that the cost of transporting clean petroleum products from Northwest Europe to West Africa has increased significantly, rising from $29.70 per metric tonne at the end of June to $37.12 per metric tonne as vessels shift to alternative markets.
It added that diesel supplies have also tightened following lower exports of Russian Black Sea cargoes, pushing up prices of high sulphur gasoil across West Africa and increasing import costs.
Despite the global price pressures, Dangote Refinery has continued to lower the prices of refined products in the domestic market.
Since the end of May, the refinery has reduced the ex-depot price of Premium Motor Spirit (PMS) by more than N200 per litre, Automotive Gas Oil (AGO), also known as diesel, by N300 per litre and Jet A1 aviation fuel by N520 per litre, even though the crude oil used for refining was purchased when international prices were significantly higher than current levels.
The refinery maintained that its pricing is determined by the actual cost of crude oil purchased under commercial contracts rather than daily movements in global Brent crude prices, explaining that crude is bought weeks or months before refining using monthly average pricing mechanisms.
According to industry analysts, the latest market developments demonstrate the importance of expanding domestic refining capacity to protect Nigeria from external supply shocks.
They noted that with international fuel prices and freight costs rising, as well as gasoline prices in regional trading hub Lomé exceeding Dangote Refinery’s prices, Nigeria’s continued dependence on imported fuel would likely have resulted in significantly higher domestic pump prices if the refinery were not operating at scale.
S&P Global said the latest market trends also reinforce Dangote Refinery’s growing influence on petroleum pricing across West Africa, with market participants increasingly treating its prices as the regional benchmark.
Analysts believe the development highlights one of the refinery’s key objectives of reducing Nigeria’s dependence on imported fuel, conserving foreign exchange, improving price stability and insulating consumers from volatility in the global energy market.
As geopolitical tensions, tighter product supplies and rising shipping costs continue to reshape global fuel markets, the refinery is increasingly emerging as a stabilising force for petroleum prices in Nigeria and across West Africa.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X