Dangote Readies $10 Billion Nigerian Oil Refinery for 2020

Dangote Readies $10 Billion Nigerian Oil Refinery for 2020
Despite being Africa's biggest crude producer and an OPEC member, Nigeria ships in almost all its gasoline and diesel from abroad.

(Bloomberg) -- Africa's richest man, Aliko Dangote, plans to start selling gasoline, diesel and aviation fuel by early 2020 from an oil refinery he's building near Lagos, Nigeria's commercial capital.

The $10 billion refinery, set to be one of the world's largest and process 650,000 barrels of crude a day, should be near full capacity by mid-2020, Edwin Devakumar, group executive director at Dangote Industries Ltd., said in an interview at the coastal site, about an hour's drive east of Lagos.

"People still have difficulty believing we can do it on time and within those costs," Devakumar, 61, said Wednesday. "But we believe we can. It's something of the size that's rarely been done before. It's huge."

Dangote, worth $12.2 billion, according to the Bloomberg Billionaire's Index, has said the refinery can transform Nigeria by weaning it off fuel imports and generating foreign-exchange through exports. Despite being Africa's biggest crude producer and an OPEC member, the West African nation ships in almost all its gasoline and diesel from abroad because of the decrepit state of its government-owned refineries.

Surplus Export

Dangote's facility will probably produce about 50 million liters a day of gasoline and 15 million liters (3.96 million gallons) of diesel, though output can be changed according to the demand for each product, Devakumar said.

While Nigeria, a country of almost 200 million inhabitants, currently consumes roughly 35 million liters of gasoline daily, Dangote can export surpluses, Devakumar said.

"Once we start producing, we'll be able to meet all local demand and we'll also be able to start exporting," he said.

The company has been in talks with oil traders including Royal Dutch Shell Plc, Vitol Group and Trafigura Group Pte about supplying the refinery with crude and buying refined products, according to Devakumar.

"We are establishing a rapport with them, but there's been nothing specific so far," he said.

The plant is designed to process light and medium grades of crude and produce fuels that meet European standards so that Dangote can sell them globally.

"We're flexible in terms of our feedstock," Devakumar said. "We'll be able to use all the African crudes, American crudes and Middle Eastern crudes. We don't want to be dependent on Nigerian crude. We won't be able to process heavy, dirty crudes. It doesn't make sense in today's environment."

Trafigura confirmed discussions had taken place. The new refinery will benefit "the West African oil market and improve fuel standards in the region," a spokesperson said in an emailed response. Antonia Lock, a spokeswoman for Vitol, declined to comment, while Shell spokesman Bamidele Odugbesan didn't immediately respond to a text message.

Upstream Investment

Dangote will start producing its own oil, partly to supply the refinery, within a few months. It aims to pump around 20,000 barrels a day from two shallow-water blocks, known as OML 71 and 72, located in the Niger River delta in southeastern Nigeria.

"We will continue to invest in upstream," Devakumar said. "We may look for more blocks to produce up to 250,000 barrels a day. It's where the majority of our cash flow from the refinery will go to. We'll focus on that after we start the refinery."


View Full Article


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Baden Kudrenecky  |  July 09, 2018
Is this project an industrial sized 419? Call me skeptical, but everything coming out of Lagos requires suspicion. - First off, the project's scope should cost about a magnitude more. - Second, there seems to be too much planned to be true, a world class size and quality refinery, a petrochemical complex, gas plant, fertiliser plant, pipelines, moorage, etc. - Third, even if there is an Indian EPCM, progress seems awfully slow: "was to take off by late 2016." "The project is expected to go operational by the last quarter of 2017" "to come on-stream in late 2017 or the first half of 2018." "upon completion in 2019." "plans to start selling gasoline, diesel and aviation fuel by early 2020" - Lastly, looking at the Google satellite imagery, the latest being only 6 months old, the site is barely developed, and nowhere near a scale I would expect. I sense some king's new clothes . . .