Dangote refinery eyes 2020 to start selling gasoline, diesel and aviation fuel

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The foundation of Dangote’s dream: At work on what is intended to be the world’s largest-ever oil refinery. Picture: Bloomberg/Tom Saater

Nigeria refinery to produce gasoline, diesel, aviation fuel

Dangote says in talks with Vitol, Shell about crude supplies

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 $12.4 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.

Surplus Export
Dangote’s facility will probably produce about 50 million liters (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.

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.”

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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