ARA pricing, sulfur limits rearrange West African gasoline flows

The gasoline arbitrage to West Africa from the Amsterdam-Rotterdam-Antwerp hub has become more difficult since new Dutch legislation kicked in April 1, with other regions taking a fresh interest, particularly the Persian Gulf.

"There is less flow to WAF because of the new sulfur limits," a source based in ARA said. "I hear the majors are cautious. They are not sure what can work."

The Dutch legislation capped the sulfur content in gasoline blends from its refineries at a maximum 50 ppm, down from 150 ppm. Nigeria imports gasoline with up to 500 ppm sulfur content.

Thus, flows of gasoline from ARA to west Africa have fallen. While 985,000 mt was seen for loading from ARA to Nigeria in February, that fell to 585,000 mt in March and 455,000 mt in April.

Elevated activity in the Platts Market on Close assessment process for finished grade, 10 ppm gasoline has been attributed by a number of sources to contract pricing for West African grades.

The West African gasoline cargo assessment by Platts, part of S&P Global Commodity Insights, is priced as a differential to ARA premium barges.

"Your window in the north is WAF driven," one market source said. "Spot WAF from ARA does not work. People take a lot from AG [Persian Gulf]."

Some 51,000 mt gasoline loaded in April from the Persian Gulf to West Africa, with none having loaded along the route from October to February, according to Kpler shipping data.

"I suppose AG is cheaper than ARA due to Russian Gulf flowing into East of Suez," another source with a view to the West African market said.

There has been widespread talk that Russian gasoline exports to West Africa have picked up. Kpler data showed a spike in flows but a reduction to 59,000 mt April, compared with the previous 211,000 mt three-month average.

Elsewhere, the US may also step up exports to West Africa. Refined Fuel Analytics said in an April 25 report the US Gulf would see increased flows to the region.

"West Africa likely represents the next major growth market for US product exports due to strong regional demand growth and -- as in Mexico -- an inability to efficiently operate refineries," it said.

A source at Dangote Group said March 15 that Nigeria's 650,000 b/d Dangote refinery will be on stream by the end of May 2023, while the NNPC has said its 60,000 b/d Port Harcourt refinery will restart in the second quarter.