From Crude Exporter to Regional Refiner: Dangote Refinery and the Reconfiguration of West African Energy Trade

This paper studies whether the Dangote Refinery has begun to transform West Africa's position in the petroleum value chain. For two decades, Nigeria exported crude oil while importing most refined petroleum products, transferring refining margins abroad and leaving Nigeria and ECOWAS economies dependent on extra-regional fuel supply. Dangote's privately owned 650,000 barrel-per-day refinery creates the physical capacity to reverse that pattern. We ask whether this represents genuine structural upgrading or a shift toward what I call regionalized dependency: a regime in which external fuel dependence is reduced but regional supply becomes increasingly organized around a dominant Nigerian refining hub.&nbsp; <div> We evaluate this question using three complementary empirical designs. First, a within-Nigeria product-level difference-indifferences design exploits the staggered rollout of Dangote's diesel and petrol production milestones. Using monthly NBS fuel-price data for 37 Nigerian states from 2017 to 2025, We find that the diesel-petrol price spread widened by NGN 568.5 per litre after the diesel milestone and narrowed by NGN 379.2 per litre after the petrol milestone. These symmetric product-specific responses provide the strongest evidence that the refinery's sequential rollout affected domestic retail price dynamics. Second, a PPML gravity model using UN Comtrade data from 2005 to 2024 finds no evidence of immediate export-led displacement of extra-regional refined-fuel suppliers: Nigeria's refined-product exports to ECOWAS remain 81 percent below the gravity benchmark in the first two post-Dangote years. Third, a Diebold-Yilmaz connectedness analysis using Bloomberg transport CPI indices shows that regional price connectedness rose from 8.6 percent before Dangote to 27.4 percent afterward, with Nigeria strengthening as a net price transmitter.&nbsp; </div> <div> Taken together, the evidence documents an early transition phase rather than a completed structural transformation. Dangote has created the capacity for regional energy reorganization, but the short post-treatment window and the simultaneous removal of fuel subsidies and liberalization of the Naira prevent a clean attribution of regional price leadership or trade-flow reconfiguration to the refinery alone. </div>