Nigeria risks lubricant shortage as global base oil supplies tighten – Argus

Nigeria could face a shortage of lubricants in the coming months as constrained global supplies of base oils and rising international prices reduce imports into West Africa, according to a report by global energy and commodity intelligence firm Argus.

The report, which cited Argus’ Head of Base Oil Pricing, Gabriella Twinning, said disruptions linked to the recent US-Iran conflict have tightened global base oil supplies, pushing up prices and limiting cargoes destined for the West African market despite the announcement of a peace deal.

According to the report, West Africa remains heavily reliant on imported base oils, bringing in an average of 135,752 tonnes annually over the past five years. Although the Dangote refinery expansion includes a base oil production unit, the facility has not yet commenced operations, leaving the region dependent on imports.

Twinning said the last major shipments into West Africa arrived in March, warning that replacement cargoes are unlikely to be available during the summer months.

“The last large shipments arrived in March, and replenishment cargoes look unavailable from exporting nations over the summer,” she said.

She attributed the supply squeeze to maintenance work at major refineries in Europe and the United States.

According to her, bulk European Group I base oil supplies, widely used in the production of engine, marine and industrial lubricants as well as greases, have been constrained following a five-week maintenance shutdown at Poland’s PK Orlen refinery, while US refiners are prioritising domestic demand and building inventories ahead of the hurricane season.

She added that crude changeovers at some Group I refineries in the United States have also reduced output.

The report noted that Nigerian lubricant manufacturers could turn to Group II heavy-grade base oils as substitutes where product formulations permit, although Asian suppliers are increasingly directing supplies to South American buyers willing to pay higher prices.

Twinning also disclosed that exports from Russia have fallen as several refineries undergo repairs, while record-high spot prices recorded in June have further discouraged purchases by West African importers due to the region’s complex payment processes.

She warned that local lubricant blenders may be forced to raise ex-tank prices and increase bid levels to compete with buyers from other regions for limited supplies.

Despite the rainy season, when logistics activity typically slows, Twinning said demand for lubricants across West Africa remains strong because inventories have continued to decline since no fresh cargoes have arrived since March.

According to the report, tanks across the region are gradually running low, raising concerns over potential supply constraints if imports do not resume soon.