Waiting for Dangote refinery

Many are waiting to see the effect the massive Dangote refinery will have on the economy and job creation. But they have to wait until the end of next year, according to this report by Reuters and Our Reporter.

AFRICA’s largest oil refinery will not be finished until the end of 2020 due to problems importing steel and other equipment, executives at Dangote, which is building the facility in the Nigerian commercial hub of Lagos, told Reuters.

Nigeria, Africa’s most populous nation, imports virtually all its fuel due to sclerotic and underutilised refineries, and even the state oil company is looking to the 650,000 barrel per day (bpd) Dangote refinery to help address this.

Price caps force NNPC to import nearly all its gasoline at a significant cost and periodic fuel shortages are common.

Despite the delays at the congested Apapa and Tin Can Island Ports in Lagos, a Dangote executive said the company could start using the refinery’s tank farms as a depot to warm-up operations.

“We will be able to complete the (refinery) project by the end of next year – mechanical completion,” said Dangote Group Executive Director Devakumar Edwin, who oversees the project.

The company expects fuel production within two months of completion of the refinery, which could transform Africa’s biggest crude producer from a fuel importer into a net exporter, upending global trade patterns.

Billionaire Aliko Dangote, who built his fortune on cement, first announced a smaller refinery in 2013, to be finished in 2016. Dangote then moved the site to Lekki, in Lagos, upgraded the size and said production would start in early 2020.

Industry sources told Reuters last year that fuel output was unlikely before 2022.

Trading plan

Edwin also said during an interview at his office in Lagos that Dangote is setting up its trading desk, with a senior team of three people and a staff of roughly 30 who will monitor international commodity prices.

“We are setting up a complete trading desk here with us. In the next three months the full desk will be set up,” he said.

Giuseppe Surace, the refinery’s chief operations officer, said the refinery’s tank farms will be finished this year and could be used as a warm-up for operations.

The tanks will be connected to five “single point mooring buoys” (SPMs), which will allow the refinery complex to pump crude straight into tanks from large ships at sea and pump products back out onto boats of any size.

The SPMs will be the primary method of supplying oil products from the refinery, Surace said, adding that the team were considering using the tanks as training or as a depot before the refinery’s production starts.

“We might do that. We will be ready to do that,” he said, though he added that no decision had been taken yet.

The team is in talks with NNPC, two other international oil companies and two large oil traders, all of whom are interested in supplying crude and buying products, Edwin said.

Edwin said the crude unit for the refinery, which set sail from China last month, would arrive by the end of October.

The trains at a fertilizer plant on the same site will start up by the end of this year, the executives said.

The planned products to be produced at the refinery

The planned annual products of the refinery include 10.4 million tonnes of gasoline, 4.6 million tonnes of diesel and 4 million tonnes of jet fuel. Others to be produced annually are 0.6 million tonnes of polypropylene, 0.5 million tonnes of carbon black feed, 0.24 million tonnes of propane and 32,000 tonnes of sulphur.

According to the owner of the refinery, Aliko Dangote, the enormous project will cost between Us $12m and Us $14m. Facilities at the Refinery Complex, the building and shipment of the atmospheric tower are indeed considered a major and significant feat; yet there are other units of the refinery left to be sourced. Among the units to occupy the refinery and petrochemical complex are mild hydrocracking (MHC) unit, residual fluid catalytic cracking (RFCC), naphtha hydrotreater, RFCC gasoline hydrodesulfurisation (HDS) unit and alkylation units, and others.

The refinery complex will also possess infrastructural facilities like access roads, administrative building, pipeline system and tank storage facilities, among others. Importantly, the facility will have a fertiliser plant to be served by the refinery by-products as raw materials. Conclusion The atmospheric tower is supposed to be a piece of major equipment at the Dangote Refinery and Petrochemical Complex. It is expected to process crude oil into fuels including gasoline and diesel.

World’s largest atmospheric tower

On July 29, the atmospheric tower, a piece of equipment that will process crude oil for the refinery set sail from Sinopec Corporation’s factory in China.

“On July 29, the world’s largest atmospheric tower built by Sinopec slowly left a wharf in Ningbo. Following the Maritime #SilkRoad, it will travel to #Nigeria and be installed at the world’s biggest single-train facility – Nigeria’s Dangote Refinery,” Sinopec said in a tweet.

The atmospheric tower has a diameter of 12 meters, a length of 112.56 meters and a unit weight of 2252 tons.

“It is the largest diameter, longest length and the heaviest single-unit equipment in domestic export equipment. It will be installed in the world’s largest single-series refinery – the 32.5 million tonnes/year Dangote refinery in Nigeria,” the Chinese firm said in a statement on its website.

The atmospheric tower is the primary unit processing crude oil into fuels, according to a Citac analyst, Jeremy Parker.

“This is a major milestone, but there is still much work to be done, both in terms of sourcing the other units and interconnection at the site,” Parker said of the atmospheric tower shipment.

Dangote Industries has awarded not less than $368m worth of contracts to 120 local contractors for the refinery and petrochemical project to help local content development initiative.

Edwin noted that the refinery would lead to significant skills transfer and technology acquisition opportunities in the country, adding that the refinery could meet the country’s requirement of all liquid products, such as petrol, diesel, kerosene and aviation fuel, and would have a surplus of each of the products for export.

Read Also: Dangote Refinery gets key component

NNPC-Dangote deal

The Nigerian National Petroleum Corporation (NNPC) and the Dangote refinery are partnering to make the refinery a success.

NNPC MD Mele Kolo Kyari said the refinery would be a win-win for entrepreneur and country.

“Ultimately, it will be a contract to supply crude,” Kyari said. The NNPC boss added that the state oil firm intends to be a “supplier of first resort” for the Dangote refinery.

Speaking during a visit to the NNPC headquarters, Dangote said there would be no competition between his refinery and NNPC’s.

A statement issued by the corporation’s Group General Manager, Group Public Affairs Division, Ndu Ughamadu, quoted Dangote as saying there would be cooperation.

Dangote Refinery can refine 650,000 barrels of crude oil per day. NNPC’s four refineries, according to the corporation’s latest operations report, is 445,000 barrels per day.

Dangote said: “The most important thing for us is to see how we can partner with the NNPC; it is not to see how we can compete with the NNPC. We would like the NNPC to be part of us and we also want to be part of the NNPC. I think that is the only way we can achieve a win-win situation.”

Kyari said the national oil firm was not in the contest for market share with the forthcoming Dangote Refinery, adding that the corporation would support it to boost in-country refining capacity.

Transforming the economy

Addressing guests at the Dangote Special Day at the 40th Kaduna International Trade Fair, the foremost industrialist said his other businesses- Dangote cement, salt, sugar refineries as well as food products would ensure food security and improve lives for decades to come.

Dangote, who was represented by the Group Executive Director, Strategy and Government Relations, Mansur Ahmed, noted that the gains of the huge investments in the different sectors by Dangote have moved the nation’s economy forward and complemented government’s effort in no small measure.

According to Dangote, the Group continues to be the largest employer of labour in Nigeria, with over 50,000 direct and hundreds of thousands of indirect employment opportunities.

“The Rice Mills established in some states, Kebbi, Jigawa, Sokoto, Enugu, Zamfara, Kano and Niger states would also ensure self-sufficient in rice production. We are doing everything possible to ensure Nigeria moves from an importing country to an exporting country.

“We have succeeded in making Nigeria exporter of cement, earning hard currencies for the country and contributing to lifting the country from recession.

“The feat is achievable because of the three Dangote Cement factories at Obajana in Kogi State, Gboko Cement factory in Benue and Ogun states because they are not only producing enough cement for local consumption but also export,” he said

President of Kaduna Chambers of Commerce, Industry, Mines and Agriculture (KADCCIMA) Dr Farida Muheeba Dankaka, lauded Dangote Group for its contribution to economic growth.

Dr Farida said the huge investment by the conglomerate is responsible for over 10 per cent of Nigeria’s Gross Domestic Products (GDP). “KADCCIMA is proud to be associated with the conglomerate,” she stated.

The refinery, analysts believe, will assist Nigeria to achieve the 1.095 million barrels per day (bpd) domestic refining target that will make it self-sufficient in refined petroleum products.

In his capacity as NNPC Chief Operating Officer, Upstream in April this year, Bello Rabiu explained how this would be achieved at the Nigeria Oil and Gas Opportunity Fair (NOGOF) in Yenagoa, Bayelsa State.

Speaking on ‘Upstream Opportunity in the Oil and Gas Sector’, Rabiu commended Dangote for his commitment to the downstream sector.

According to him, the coming on stream of the Dangote 650,000 bpd Refinery and efforts by the NNPC to revamp the country’s refineries in Port Harcourt, Kaduna and Warri with a total capacity of 445,000 bpd, would help to achieve zero importation of refined petroleum products. Speaking during a technical session on “Infrastructure as a key enabler for opportunities in the oil and gas sector,” the Executive Director, Dangote Group, Ahmed Mansur, said private sector investment and execution capacity in the gas sector needed to complement government’s efforts in the industry.

Mansur said the Dangote Group catalyses private investment to supplement the Federal Government’s onshore gas development agenda. He added that the company is building pipeline infrastructure that would augment the natural domestic gas supply and add an estimated 12,000 megawatts (Mw) of electricity to the power generation capacity.

Mansur said the first phase of the project is expected to deliver gas for use by Dangote Industries including the proposed fertilizer plant in the refinery complex and other identified industrial and power plant users.

“The pipeline infrastructure will create a corridor for evacuation of trapped gas from offshore platforms in Nigeria for utilisation and monetisation.

“The project is expected to improve gas supply security for use by power plants, fertiliser production and other industrial factories. It will complement the existing gas supply system in the country and also complement the Nigerian Gas Master Plan,” he added.

With works on the refinery being intensified to meet the completion deadline, Mansur said: “We have bought 1026 trucks and tippers to improve the capacity of the local logistics. We have set up the world largest ready-mix concrete capacity at any given location to produce ready mix concrete including 72 concrete pumps and 141 transit mixers since the annual concrete manufacturing capacity in the country is inadequate.”

He said the company is currently training 200 artisans selected from the Ibeju Lekki host communities in the areas of masonry, carpentry, air condition electricians, plumbing, welders, iron-benders and auto mechanics in collaboration with the Nigerian Directorate of Employment and the Nigerian Content Development and Monitoring Board.

Delay is not denial

Though the take-off of the project has been delayed, analysts are still convinced that the country’s economy would gain a lot from this gigantic project, which is expected to generate 9,500 direct and 25,000 indirect jobs for Nigerians and foreign experts. Dangote believes it will rake in $26.2 billion for Nigeria annually.