Dangote Refinery sets 2020 for petrol
… fertilizer export begins this year
The Dangote refinery plans to start selling petrol, diesel and aviation fuel by early 2020, but the fertiliser plant, will start producing urea this year, Edwin Devakumar, the group executive director has said.
The $10 billion refinery, set to be one of the world’s largest and which can process 650,000 barrels of crude a day, should be near full capacity by mid-2020, Devakumar said in the interview,
“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.”
Aliko Dangote, worth $12.4 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.
Mr. Devakumar Edwin of Dangote GROUP: says urea export will begin this year, while production of petrol, diesel and aviation fuel will gebin early 2020
Dangote’s facility will probably produce about 50 million litres (13.2 million gallons) a day of gasoline and 15 million liters of diesel, though output can be changed according to the demand for each product, Devakumar said.
While Nigeria, a country of almost 200 million people, 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 them supplying 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.
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 Delta.
“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.”
A fertilizer plant, located near the refinery, should produce its first batches of urea by the end of this year, Devakumar said. Costing around $2.5 billion and with a capacity of 3 million metric tons a year, it’s set to be one of the biggest globally.
“We can export a lot of fertilizer too,” he said. “It can meet the demand for most of Africa.”
While Dangote took on a $3.3 billion syndicated loan, which Standard Chartered Plc arranged, most of the refinery and fertilizer projects are self-funded. Both units will probably be partly sold via initial public offerings eventually, Devakumar said.
“We’ll go for listings, as separate companies,” he said.
Dangote is also building two 550-kilometer (341-mile) underwater gas pipelines from its oil blocks in the Delta to the refinery and fertilizer factory. The first pipeline will start to be laid this year and both will probably be completed in two years, at a cost of $2.5 billion, Devakumar said.
They’ll be able to carry 3 billion standard cubic feet per day, which will be used to run the plants and sold to other businesses, including power stations. Only about 400 million scf of gas is distributed in Nigeria today and the new pipelines will help drive industrial development, Devakumar said.
