More European Refineries Struggle as Dangote Ramps Up Output

Why European Refineries Are Struggling

For decades, European refineries supplied the bulk of petroleum products to international markets, particularly
Africa. However, the dynamics have changed in recent years. The challenges European refineries face include:

• High Operating Costs: Labor, energy, and regulatory compliance costs are much higher in Europe compared to emerging markets.
• Stricter Environmental Regulations: EU climate policies require expensive upgrades to reduce carbon emissions.
• Aging Infrastructure: Many European refineries were built decades ago and are less efficient than new facilities like Dangote’s.
• Reduced Demand: The push towards renewable energy and electric vehicles is cutting into Europe’s fuel consumption.
• Competition from Emerging Markets: New refineries in Asia and Africa are supplying markets that Europe once dominated.

The net effect has been closures, bankruptcies, and consolidations. According to industry analysts, nearly
25% of Europe’s refinery capacity has shut down in the past 15 years, with more at risk as
the global energy market evolves.

Dangote Refinery: A Game-Changer for Africa and Beyond

The Dangote Refinery represents not only a landmark investment for Nigeria but also a
transformation of Africa’s place in the global oil industry. Designed to reduce Nigeria’s dependence on
imported refined petroleum products, the refinery has far exceeded local expectations by becoming a serious
exporter to international markets.

With a refining capacity larger than the entire consumption of West Africa, Dangote is producing a range of
products including petrol, diesel, aviation fuel, and polypropylene. Its strategic location near the Lagos
port ensures direct access to shipping routes that connect Africa to Europe, the Americas, and Asia.

By supplying petroleum products at competitive rates, Dangote is not only meeting Nigeria’s domestic demand
but also replacing European exports in African markets. Countries like Ghana, Togo, Ivory Coast, and even
parts of Southern Africa are now turning to Dangote for supply, reducing Europe’s market share dramatically.

Impact on Global Oil and Gas Markets

The rise of Dangote Refinery is reshaping global oil markets in multiple ways:

• Displacement of European Exports: Africa was once a reliable consumer of Europe’s petroleum exports. Dangote is reversing that trend.
• New Trade Flows: Instead of shipping crude oil out of Nigeria, refined products are now being exported, keeping more value in Africa.
• Lower Global Fuel Prices: Increased refining capacity in Africa has added competition, helping stabilize or lower prices.
• Shift in Investment: Global investors are looking at Africa as a new hub for refining and petrochemical industries.
• Strategic Rivalry: Europe, Asia, and the Middle East are all adjusting strategies to compete with Africa’s newest refining giant.

Analysts note that this shift is comparable to Asia’s refinery boom in the early 2000s, which displaced
U.S. exports. Dangote is creating a similar disruption for Europe today.

European Refineries at Risk of Closure

Several European refineries, particularly in Italy, France, and the Netherlands, are facing
significant threats due to oversupply in the global market. Facilities that once thrived on exporting to
Africa now find themselves unable to compete with Dangote’s lower production costs and proximity to key markets.

According to a 2025 report by the International Energy Agency (IEA), as many as
five European refineries could close within the next three years if market conditions remain
the same. This trend is accelerating Europe’s shift towards renewable energy, but it also risks job losses,
economic decline in refinery towns, and a weakening of Europe’s influence in global oil markets.

Environmental and Policy Dimensions

Europe’s refinery struggles are not only about economics but also about environmental and policy issues.
The European Union’s Green Deal aims to achieve net-zero carbon emissions by 2050, which
requires scaling down fossil fuel production. This makes investment in traditional refining unattractive.
Meanwhile, Africa, with less stringent environmental regulations, is able to expand refining at lower costs.

However, Dangote has emphasized its commitment to global best practices, including lower
sulfur fuel production, reduced emissions technology, and a focus on cleaner energy solutions in the long term.
This balance between economic growth and environmental responsibility could make Africa’s refinery expansion
more sustainable than critics expect.

Strategic Importance of Dangote Refinery for Africa

For Africa, the Dangote Refinery is more than just an industrial project—it represents a new era of
energy independence. For decades, African nations exported crude oil and imported refined
products, losing billions of dollars in the process. Dangote changes that equation by:

• Reducing Import Bills: Nigeria alone spent billions annually importing refined products. Dangote cuts this cost drastically.
• Boosting Regional Trade: Neighboring African countries benefit from cheaper and closer supplies.
• Job Creation: The refinery has already created thousands of jobs directly and indirectly.
• Economic Growth: By keeping value-added activities within Africa, Dangote stimulates GDP growth.
• Geopolitical Leverage: Africa now has a stronger voice in global oil negotiations and trade dynamics.

Market Reactions and Industry Forecasts

Global energy experts are watching closely as Dangote continues to expand output. Financial markets have
reacted positively, with investors seeing Africa as a new growth hub in energy. Oil companies in Europe,
meanwhile, are recalibrating strategies, with some considering partnerships or acquisitions
in Africa to remain competitive.

According to Goldman Sachs, Africa could increase its share of global refined product exports
from 3% to 12% in the next decade, thanks largely to Dangote. This projection underscores the long-term
implications of the refinery’s success.

Challenges Ahead for Dangote

While the Dangote Refinery is currently thriving, challenges remain. These include:

• Infrastructure Bottlenecks: Efficient transportation and export logistics remain critical.
• Policy Risks: Changes in Nigerian government regulations could impact profitability.
• Global Energy Transition: As the world moves towards renewables, long-term oil demand remains uncertain.
• Operational Scale: Managing such a large facility requires consistent efficiency and innovation.

Nonetheless, the refinery is well positioned to weather these challenges, thanks to its modern design,
strategic partnerships, and growing influence.

Conclusion

The global oil refining industry is at a crossroads. While European refineries struggle under
economic, regulatory, and competitive pressures, Dangote Refinery is rising as a new force,
reshaping trade flows and redefining Africa’s role in the global energy sector. The shift is symbolic of the
broader transformation underway in global economics, where emerging markets like Nigeria are not only
catching up but also outpacing traditional powers.

As Dangote ramps up output, European refineries will continue to face existential questions: invest in costly
upgrades, shift towards renewables, or shut down. Meanwhile, Africa’s oil and gas industry enters a new era,
one where it not only supplies crude but also sets the agenda for refined product markets.