Singapore to receive its first fuel oil cargo exported from Nigeria’s Dangote refinery

Reuters | Singapore, Asia’s oil hub, will be receiving this week its first low-sulphur straight-run fuel oil (LSSR) cargo exported from Nigeria’s new Dangote refinery, according to ship-tracking data and market sources.

This marks a new trade flow from the newly-commissioned refinery to Asia, a region that is structurally short on low-sulphur fuel oil required to meet demand for ship refuelling at the world’s largest bunker hub Singapore.

The Dangote refinery, which started production in January and cost US$20 billion to build, can refine up to 650,000 barrels per day (bpd) of products and will be the largest in Africa and Europe when it reaches full capacity.

The refinery has been exporting more LSSR since March, with most of these cargoes landing in America and Europe so far, ship-tracking data from Kpler and Vortexa showed.

The first such cargo to Asia is scheduled to arrive on Wednesday, with the Glencore-chartered vessel Front Brage carrying about 124,000 metric tons (787,400 barrels) of LSSR to Singapore, the data showed.

Some market sources said the cargo was sent to Asia due to a much weaker market in Europe. The front-month 0.5 percent LSFO east-west spread, which is the difference between prices in the East versus the West, remained above US$40 a ton this week, LSEG data showed.

Dangote’s LSSR cargoes are typically priced at a differential to Rotterdam 0.5 percent LSFO quotes on a free-on-board basis, according to market sources, although the differential was not immediately known.

Another LSSR cargo from Dangote comprising about 157,000 tons is also expected to arrive at Singapore on vessel Stena Suede in July, ship-tracking data showed.

Dangote did not immediately respond to a Reuters‘ request for comment.

LSSR is typically blended with other fuels to produce LSFO bunker fuel, or used as a feedstock in refinery processes.

Dangote started issuing tenders to sell oil products for export in February. It also began buying crude in December last year, with Nigeria’s state-owned oil firm NNPC Ltd as its main supplier.