By Adewole Kehinde
In December 2019, Dangote refinery project took delivery of the world’s largest single crude distillation column signaling the readiness of the 650,000 barrels a day refinery; one of the World’s second biggest.
The Dangote refinery on the coast of Lagos is expected to reverse the decades-old system of exporting crude oil and importing refined petroleum products such as Petrol, Diesel and Lubricating oil.
Also, the refinery will ease pressure on the Naira by freeing up about N2trillion used to import refined petroleum products each year as well as create jobs in services and manufacturing around the project.
If the refinery satisfies Nigeria’s internal demand, it would save over N3trillion.
Ending that system would mean that the estimated N120Billion paid to subsidise fuel monthly would be saved.
It will also allow Nigeria to use all its OPEC quota for exports and at the same time meet all its local needs for petroleum products, then would be able to export over 100,000 b/d of refined products for Forex to the region and beyond.
The proposed acquisition of a 20% stake by the Nigerian National Petroleum Corporation in Dangote refinery is a welcome development since the corporation would not be acquiring a majority stake in the refinery.
It should be a good partnership like the Nigerian LNG Limited where the NNPC has a 49% stake; Shell has 25%; Total has 15% and Eni, 10%. As we all know, the Nigerian LNG Limited now generates billions of dollars in dividends for the Federal Government.
By the time the Nigerian National Petroleum Corporation acquire the 20%, it would be a win-win situation for the NNPC and Dangote refinery.
It will be recalled that S&P Global Platts had reported on Thursday, 27 May 2021 that the NNPC was in advanced talks with Dangote Industries to acquire a 20% stake in the 650,000 bpd Dangote oil refinery.
“Negotiations have reached an advanced stage. We are hoping to wrap up the negotiations before the refinery goes on stream. This is a deliberate move to ensure that the risk associated with refinery business does not weigh solely on Dangote Industries, and also a bold statement that the government is ready to encourage private investors in the building refineries,” a company spokesman was quoted as saying.
The Dangote plant, which will be Africa’s largest refinery, is expected to start commissioning early 2022, according to S&P Global Platts.
Nigeria imports around 1 million to 1.25 million metric tonnes/month of petrol due to inadequate domestic refining capacity.
All the refineries, with combined nameplate capacity to refine 445,000 bpd of crude oil, are currently shut down.
NNPC’s has been looking to reform the country’s downstream sector for almost a decade now but progress has been slow.
But NNPC recently started repairs of Nigeria’s Port Harcourt refinery last month after the necessary financing was secured. It is now working on getting funding for the overhaul of the other plants.
NNPC says it expects them to operate at around 90% of capacity when repairs are completed, and they resume production by 2023.
The refineries have operated sporadically due to years of neglect, forcing Africa’s largest crude producer to rely heavily on imports to meets its domestic fuel needs.
The Dangote Refinery crude distillation unit has been designed to process 12 crudes at one time and has been engineered to process three Nigerian crude grades; Escravos, Bonny Light and Forcados.
The plant will yield 327,000 b/d of gasoline, 244,000 b/d of gasoil/diesel, 56,000 b/d of jet fuel/kerosene as well as 290,000 mt/year of propane/LPG when fully operational, according to a Dangote presentation given at an industry event last year.
It will also produce 830,000 mt/year of polypropylene, 600,000 mt/year of slurry, 290,000 mt/year of propane and 38,000 mt/year of sulfur.
The refinery received most of its key refining units, such as the columns that make up the plant’s crude distillation unit reactor, regenerator and fluid catalytic cracker, in 2019.
Adewole Kehinde is the Publisher of Swift Reporters and Energy Fellow of the Abuja Chamber of Commerce and Industry Policy Centre
