Ship tracking data and market sources reveal that Singapore, Asia’s oil hub, will receive its first low-sulfur straight-run fuel oil (LSSR) cargo from Nigeria’s new Dangote refinery this week.
This marks a new trade flow from the newly-commissioned refinery to Asia, a region structurally short on low-sulfur fuel oil required to meet demand for ship refueling at the world’s largest bunker hub, Singapore.
The Dangote refinery, which started production in January and cost $20bn (R371bn) 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 the cargo landing in America and Europe so far, ship tracking data from Kpler and Vortexa showed.
The first 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% LSFO east-west spread, which is the difference between prices in the east and west, remained above $40 (R742) a ton this week, LSEG data showed.
Dangote’s LSSR cargoes are typically priced at a differential to Rotterdam’s 0.5% LSFO quotes on a free-on-board basis, according to market sources, though the differential was not immediately known.
Another LSSR cargo from Dangote, comprising about 157,000 tons, is expected to arrive in Singapore on the vessel Stena Suede in July, ship tracking data showed.
Dangote did not immediately respond to Reuters’ request for comment.
LSSR is typically blended with other fuels to produce LSFO bunker fuel or used as feedstock in refinery processes.
In February, Dangote initiated the process of selling oil products for export and commenced purchasing crude oil in December last year, primarily from Nigeria’s state-owned oil firm, NNPC Ltd.
