Belgium has approved new quality controls set to suspend the export of cheap, low-quality motor fuels from its ports to West Africa, the government confirmed, in a move that could shift trade flows to alternative supply hubs.
Zakia Khattabi, Belgium’s Minister of Environment announced the country has banned the exports of toxic fuels that are domestically prohibited but continue to be shipped to West African nations including Nigeria, Ghana, and Cameroon. This comes following the Royal assent of a new legislation that seeks to tighten the quality of exported fuels.
The ban targets oil companies that export motor fuels, primarily from the port of Antwerp, with excessively high sulfur or benzene content that have long been banned in Europe due to their harmful effects.
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Data show that oil companies have been exporting dirty fuels with a sulfur content as high as 1,500 ppm (parts per million), far exceeding European standards that are capped at 10 ppm.
The new measures mirror regulations imposed by the Netherlands last April, which made Antwerp a hotspot for low-quality gasoline exports to West Africa due to its less stringent controls.
In a statement May 23, Khattabi addressed the risk of “dirty fuel” exports having shifted from the Netherlands to Belgium, underscoring the health risks of high-sulfur products. “For far too long, toxic fuels have departed from Belgium to destinations, including Africa. They cause extremely poor air quality in countries such as Ghana, Nigeria and Cameroon, and are even carcinogenic,” she said.
Meanwhile, low-quality gasoline imports from Northwest Europe remain the key source of motor fuel in West Africa without significant domestic production.
According to S&P Global Commodities at Sea data, West Africa imported about 137,000 b/d of gasoline from Belgium in April, comprising 33 percent of imports for its primary motor fuel. The share has increased from 18percent of West African imports in April 2023, the same month the Netherlands imposed its ban.
Trade flow shift
With the ban expected to end cheap gasoline exports to West Africa, markets have eyed new sources of discounted fuel that could increasingly come to the fore.
Belgium’s Minister of Energy Minister Tinne Van der Straeten expressed hope that the move would halt the flow of harmful fuels to West African nations. “By combining our strengths and powers, we can put an end to the export of toxic fuels to third countries.” she said. “Since the relevant oil companies do not take this responsibility upon themselves, we are asking the administration to monitor the quality of the fuels being exported.”
Meanwhile, traders expect WAF buyers to be unwilling to pay a premium for higher quality product, and have already been eyeing blending opportunities in the Mediterranean and the UK, where export controls remain less stringent.
Storage operators in Antwerp had reported a growing reluctance among WAF exporters to sign multi-year deals at the port, in anticipation of the new export controls and demand for cheap flows from alternative sources, while premiums for storage capacity in Belgium are now expected to evaporate.
In recent months, one storage operator in Cyprus reported a large trader seeking vast quantities of gasoline capacity at the terminal, while gasoline traders have flagged Barcelona as another potential source of new flows.
Beyond Europe, West Africa currently only sources small volumes of gasoline from other regions, taking small volumes of around 20,000 b/d from the Middle East.
Russian gasoline exports could also take on new prominence, analysts have speculated, noting its recent waiver on a gasoline export ban implemented in March.
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Eyes on Dangote, domestic specifications
Severed flows of cheap gasoline supplies from Northwest Europe will put a renewed focus on Nigeria’s new Dangote refinery, which has pledged to end West Africa’s dependence on imported fuel.
As the 650,000 b/d refinery has ramped up its operations, its ownership has continued to promote ambitious timelines for its first gasoline supplies, which will eventually be sufficient to cover the domestic market.
Speaking at the Africa CEO Forum Annual Summit in Kigali on May 17, refinery owner Aliko Dangote said Nigeria would not need to import “a drop” of gasoline from June, while S&P Global Commodity Insights analysts maintained that the site’s first gasoline supplies were unlikely to arrive before the third quarter and steady state production should take place around 2027.
As traders await news of the start-up of the site’s motor spirit block and fluid catalytic converter, the commissioning of the refiner’s gasoline-producing units promises to materially affect export prospects to West Africa.