Dangote Petroleum Refinery and Petrochemicals Industries is helping to keep fuel prices in Nigeria steady. This comes even as global fuel prices rise due to higher shipping costs and a squeeze on supply, according to S&P Global Commodity Insights.
The firm highlighted that the refinery's pricing strategy is protecting consumers from rising import costs, which are pushing fuel prices higher across West Africa.
S&P's latest report shows that importers in Nigeria are worried about the sharp rise in international gasoline prices. Traders say this pressure is due to the higher global prices and increasing shipping costs.
Market players told S&P that gasoline prices in Nigeria are effectively being kept low because of Dangote's prices. This limits importers from increasing prices to match the higher international costs.
One trader pointed out that while gasoline prices in Ghana are higher, the prices for Nigerian gasoline are still stable. This is because the Dangote Refinery has not changed its coastal sales prices despite the rising international prices.
"Lomé values have risen above Dangote sales prices, which has shut the arbitrage," a trader said. This shows that bringing fuel into Nigeria is becoming more expensive under the current market conditions.
This situation is happening as global shipping costs have also increased sharply.
According to S&P Global, the cost of shipping clean petroleum products from Northwest Europe to West Africa has jumped from $29.70 per metric tonne at the end of June to $37.12 per metric tonne. This increase is because ships are moving to serve other markets.
Diesel markets are also tightening due to fewer Russian Black Sea cargoes, which is driving up prices for high-sulphur gasoil across West Africa and increasing import costs.
Despite these pressures from the global market, Dangote Petroleum Refinery has kept its prices steady.
Since the end of May, the refinery has reduced the ex-depot price of Premium Motor Spirit (PMS) by over N200 per litre, Automotive Gas Oil (AGO) by N300 per litre, and Jet A1 aviation fuel by N520 per litre.
This has been done while processing crude oil bought at much higher prices before.
The refinery insists that the pricing of petroleum products is based on the actual costs of crude oil buying, not on the daily changes in international Brent prices.
They explained that crude oil is purchased weeks or months ahead under contracts that tie prices to monthly averages.
Industry analysts say the recent market changes highlight the importance of local refining in protecting Nigeria from external shocks.
With global product prices going up and shipping costs rising, Nigeria's reliance on fuel imports would have led to much higher pump prices without the refinery's regular operations.
The latest S&P report also shows that Dangote Refinery is becoming a key player in setting petroleum prices in West Africa.
Market players see the refinery's prices as a standard for the region. Importers find it hard to compete when international costs are higher than local refinery prices.
Analysts believe this situation shows one of the main goals of the 700,000-barrel-per-day refinery.
This goal is to protect Nigeria from global market disturbances, reduce the need for imports, save foreign currency, and provide better price stability for users.
As global tensions, tighter supply, and rising shipping costs continue to affect fuel markets, Dangote Petroleum Refinery is becoming not just Nigeria's main source of refined fuels but also a stabilizing force for energy markets in West Africa.
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