Russia, Middle East squeeze Europe out of key West African gasoline market

By Rowena Edwards and Ahmad Ghaddar LONDON, May 3 (Reuters) - Northwest European gasoline exports to West Africa, a key outlet for Europe, plunged to a 17-month low in April as Middle Eastern and Russian exporters elbowed in, a trend set to continue as new Dutch environmental legislation complicates sales to the region. Exports of the motor fuel to West Africa from northwest Europe stood at about 630,000 tonnes in April, down sharply on March levels and their lowest since November 2021, Refinitiv data showed. Meanwhile exports from the Mideast Gulf to West Africa reached 253,000 tonnes in April, their highest since March 2022. That came after a sharp increase in Russian exports to West Africa over the first quarter, as G7 sanctions and an EU embargo on Moscow after its invasion of Ukraine forced it to find new outlets for its oil. The downward trend of falling gasoline exports to west Africa from the Amsterdam-Rotterdam-Antwerp (ARA) hub is expected to persist as Russia has gained market share in the region, shipbrokers BRS said in a recent note. New, stricter regulations in the Netherlands on the quality of road fuels that can be exported have also likely contributed to the fall, analysts say. Dutch regulations came into force on April 1 requiring fuel blends for export markets to meet standards on sulphur, benzene and manganese content. The Netherlands is a key global hub for gasoline blending components and African markets are usually the main outlet for fuel blends that do not meet stricter environmental specifications in Europe. Over 2019-2021, an average of over 40% of the fuels imported by Nigeria were produced by and originated in the Netherlands, according to a Netherlands court judgement relating to the Dutch ruling.

"The implementation of the Dutch policy... will further eat into Europe's export competitiveness to Africa, as Nigeria has a higher sulphur limit and might increasingly shift to cheaper imports, higher sulphur from the Middle East," BRS said. Companies are looking for blending tanks outside the Netherlands, but storage space in countries such as Belgium is already limited, BRS broker Krien van Been said. "More blending is done offshore, on the roads, with more risk for contamination or spills," she said. "A lot of blending is done in the Mediterranean or Fujairah, however it is less attractive since the blending components are mainly in ARA." Shell, which operates Europe's largest refinery in Rotterdam, said it supports the new regulations. "We are already supplying only these cleaner fuels from our operations in the Netherlands and will continue to follow specifications per the new and more stringent standards introduced in April 2023," a company spokesperson said. (Reporting by Ahmad Ghaddar and Rowena Edwards in London; Editing by Jan Harvey)

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