Africa’s biggest refinery takes shape

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Work in progress in Dangote refinery

The completion of Dangote Refinery in 2019 will mark another milestone in the Nigerian oil and gas industry as it holds the prospect of stopping the importation of refined petroleum products by Nigeria.

The Dangote Refinery will produce 650,000 barrels per day of refined petroleum products to meet all the country’s refined petroleum products needs.

It will also have spare volume  for export to other countries.

Nigeria spent N2.59 trillion to import refined petroleum products in 2016, according to the National Bureau of  Statistics.

Dangote, the promoter, said that the refinery is  primarily meant to diversify the resource base of Nigeria.

“This is the biggest industrial site anywhere in the world from the fertiliser, petrochemical and refinery plants. The Dangote Refinery will produce 650,000 barrels per day of refined petroleum products to meet all the country’s refined petroleum products needs as well as export to other countries.

Dangote refinery and petrochemicals under construction

“Our refinery will be 1.5 times the capacity of all the existing four refineries in the country even if they are working at 100 per cent capacity.

“This is the single largest refinery in the world. The petrochemical that we have is 13 times bigger than the Eleme Petrochemical built by government,” Dangote said.

Vice President Yemi Osinbajo described the project as an incredible industrial undertaking, the largest and most ambitious on the continent.

The Dangote Refinery is an integrated petro chemical complex. Apart from refining crude oil to petroleum products, it will also have petrochemical and fertiliser plants.

Mansur Ahmed, an Executive Director in Dangote Group, said that the petrochemical plant would process 1.3 million metric tonnes per annum of petrochemical products.

Progress of work at Dangote refinery in Lagos

The fertiliser plant will produce 2.8 million metric tonnes of assorted fertiliser, while the gas plant will produce three million cubic metres of gas per annum.

The refinery will also have the largest sub-sea pipeline infrastructure in the world with capacity to handle three billion cubic metres of oil annually.

The project is located in Lekki Free Trade Zone on a vast land mass of 2,200 hectares, an area eight times bigger than the entire Victoria Island in Lagos.

According to Mansur, the first phase of the plant will be ready by the end of 2017, the second phase by the end of 2018, while the third and the commencement of the refinery will be in 2019.

Nigeria with large crude oil reserves and the largest crude oil producer and exporter in Africa and eighth in the world, still imports more than 80 per cent of its petroleum products needs.

The country sometimes experience embarrassing fuel shortages  because of import shortfall, strikes by oil workers and shutdowns of the three refineries, operated by NNPC. 

The Port Harcourt Refinery has capacity to produce 10.500 million mt/y (metric tonnes per year) of refined products, but it is producing at less than 20 per cent of this capacity.

The Kaduna Refinery, built in 1980, has capacity to produce 5.5 million mt/y (110,000 b/d), while Warri Refinery, built in 1978, has capacity to produce 6.2 million mt/y (125,000b/d) of refined products.

It is, therefore, good news that Nigeria will now host one of the largest refineries in the world after the Jamnagar Refinery in Gujarat, India, which produces 1,240,000 barrels per day.

The Dangote Refinery will be the biggest in Africa surpassing  South Africa’s Sapref Refinery, which produces  180,000 barrels per day and Cairo’s Mostorod Refinery with a capacity of 142,000 barrels per day.

Dangote has already provided $7 billion in equity out of the $14 billion estimated total cost of the project.

Some Nigerian banks have provided a syndicated loan of $3.3 billion for the project.

The African Export-Import Bank (Afreximbank) has, in addition, promised to assist the Dangote Group to access foreign exchange and funding for the project.

Dr Okey Oramah, its President, gave the assurance during a tour of the project with the bank’s board members in 2016.
Oramah said that the board members decided to visit Dangote group to assess the project for possible financial assistance.

He said that Dangote Group was making tremendous impact across the continent, notably in Tanzania, The Gambia, Zambia, Niger and  Cameroon .

“We are supporting them in what they are doing in those countries, so we are equally supporting them in this ongoing project, so it is important for the Board of Directors of Afreximbank to pay a courtesy visit to the site.

“It is important to come and see firsthand the project that is ongoing because we are also planning to support them to ensure the project is delivered on scheduled.

“We are looking at providing all necessary support both financial and otherwise to ensure that the project is completed within the time frame.

“We are also looking at providing support widow for Dangote group that will be used to fund its projects to completion.

“The impacts of the projects are not going to be felt in Nigeria alone but across Africa, especially West Africa. So for us it’s a strategic partnership we are building.

“If we help them to impact lives across the continent, they will equally help in delivering on our mandate to meet the objective of Afreximbank,” Oramah said.

Some other private investors are still visiting the project site to evaluate the facilities with the prospect of investing in the project.

The likely benefits of the Dangote Refinery to Nigeria are diverse.

Dangote said that the project would save the country about $7.5 billion annually in foreign exchange being used to import petroleum products and also generate $5 billion foreign exchange earnings annually.

The plant, according to him, will generate over 100,000 employment opportunities and revive over 11,000 filling stations that had been shut due to shortage of products.

Dangote said that the refinery would crash the price of petrol products in Nigeria.

He urged the Federal Government to sincerely pursue the diversification programme, stressing that projects like the refinery were needed to wean Nigeria from heavy reliance on crude oil export.

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  1. Ike Okeke Reply

    I will recommend that everyone read the quartz magazine article on Dangote. There is no nation on earth that goes out of it way and use citizens tax money to create and prop up a monopoly. No nation should put all its economic egg in one man or one company. The FG should adopt strategies to create and encourage competition. It should even give seed money to create regional players in the refinery business. Dangote thrives in an environment where it used its closeness to the govt to ban or eliminate competition so that he can charge whatever price that he chooses. The Govt has been trooping to the development site even when no physical construction is taking place. Stories are planted in the media to glorify and lionize Dangote as our savior. Yet Dangote pays less than 2% in taxes. A bad business decision at Dangote can derail our economy into years of recession. There is so much sleeze and inbreeding going on between Dangote and FG that further enslaves all citizens of this great country. Cement in Nigeria cost 200% more compared to other countries in the world. Dangote is given exclusive license to mine limestone, major ingredient in road construction and cement production. Once this refinery is completed,FG will ban importation of any refined products, it will make it impossible for another refinery to start up and it will sell crude oil to Dangote at give away price further cementing its monopoly and guaranteeing its profitability as the expense of average Nigerians. The control Dangote will have over our lives and future is already mind boggling. The FG should as a matter of urgency give long term loan to companies interested in refinery to build small and medium scale plants and force Dangote to sell some of his cement plants to create competition in this critical industries in any Nation. Dangote should be at a 15 to 20% tax bracket after all incentives. We spend all our common wealth to build this monopoly and yet he does not give back to the society that gave so much to him by paying the right amount of tax. Haba.

  2. Ike Okeke Reply

    Why does the FG not sell all the remaining refineries that it currently operates. Why don’t the FG give away those refineries on a profit sharing agreement with interested local and international investors. The new investors will spend $billions to retool and modernize the plants, even at 25% profit going to the govt, it will still be a win win situation for the citizens than building Dangote into a monopoly. Monopoly destroys any Nation. It is laughable that Dangote will crash the price of petroleum products on completion. Has he crashed the price of cement even though he controls 70% of the market. Instead he connived with NSO and FG to eliminate competition by proposing a ban on 32 grade cement. If it had succeeded with the 42.5 grade, he will control 100% of the cement business. I know a lot of you will attack and vilify me but DANGOTE IS A SERIOUS AND PRESENT DANGER TO OUR ECONOMY.

  3. yinye Reply

    God…this will be big i tell you.
    God bless nigeria