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Dangote; Larger Refinery Scope, 2017 Supply

Aliko Dangote says the input volume of crude oil for his proposed refinery in Nigeria has been increased to 500,000Barrels of Crude Oil per Day.
It’s 25% greater than stated when the mission was introduced in late 2013. The new input figure is clearly larger than one-fifth of Nigeria’s manufacturing.
“We needed to broaden the scale to get extra value for the money”, he told a gathering of petroleum geologists in Lagos in early November 2014. Foundation work is occurring on the mission site in Lekki, in the east of Lagos. Venture begin-up date was June 2014. “We ought to be ready to finish in 36 months”, he said. That can be November 2017. Dangote’s frank disclosure of the main points of the combined refinery and petrochemicals complicated, compels a disavowal of scepticism concerning the venture, which analysts have described as daring the Nigerian risk. “The banks have paid $2.4Billion out of the $3.25Billion they promised to loan. We’re using that as deposit.” Dangote stated that “the advanced would assist retain $17Billion out of the cash expended on petroleum merchandise import into Nigeria and would herald $7.5Billion as export proceeds“.
The refinery is to be co-situated with a petrochemical and fertilizer plant. The increase in crude oil will assist double the output of polypropylene from 750,000Tonnes Per Annum to 1 Million Tonnes Per Annum.
Africa’s richest tycoon was talking extempore, after an official speech, at the All Convention Luncheon of the Nigerian Association of Petroleum Explorationists (NAPE)’s 32nd Annual Conference. He did not say if the original output volumes of the refinery merchandise had modified. In 2013, his firm announced 7.684 million metric tonnes per annum (MTPA) of gasoline, otherwise referred to as premium motor spirit (PMS); about 5.30 million MTPA of automotive gasoline oil (Ago) or diesel; about three.740million MTPA of Jet Gas/Kerosene; about 0.213million MTPA of liquefied petroleum fuel (LPG), and about 0.625million MTPA of slurry/fuel oil.

Contracts for the construction of the complicated had been reported in 2013 to have been awarded to US-primarily based conglomerate, UOP, a subsidiary of Honeywell Worldwide, a Fortune 500 firm that makes a speciality of client products, engineering services and aerospace systems. But at this forum, Mr. Dangote stated that although piling work on the inspiration at the Lekki Free Trade Zone was ongoing, “tenders will begin going out”. This was barely complicated, however we had no room to ask more questions. It was reported in 2013 that the challenge supervisor for the refinery and petrochemical plant was India Engineers Limited, an Indian authorities-owned company credited with the establishing of refineries in India. Saipem, an engineering subsidiary of Italy’s ENI, gained the contract for the fertilizer plant.

What had fuelled misgivings across the refinery element of the undertaking most is that the investment resolution had taken place against the background of solely partial deregulation of Nigeria’s oil and fuel downstream. Authorities controls the price of PMS and Kerosene, whereas oil and natural gas corporation the costs of In the past, DPK, Aviation Gasoline, LPG and other petroleum merchandise have been determined by market forces since 2001. Any attempt by the state to go away the price of PMS to the vagaries of the market is forcefully resisted by Nigerians. And but the subsidy fee to petroleum marketers who import the products at international costs has ballooned a lot it is taking up money that could have gone to fund infrastructural initiatives. The Dangote Refinery is expected to buy crude oil at worldwide costs and then promote the merchandise to the same cast of entrepreneurs who currently import the products. The refinery is predicted to be a wholesaler of petroleum products and if the value of its PMS is increased than the subsidized value, the consumers pay in full and get the subsidy from government. If the Dangote refinery chooses to be a retailer, then it gets paid subsidy by government. In a 2013 article, The Financial Instances of London quoted Ngozi Okonjo Iweala, Nigeria’s Finance Minister as saying, per the Dangote refinery complex: “If you’re promoting refined petrol, you’ll get the subsidy.”
That afternoon in early November 2014, Mr Dangote disclosed how crude oil input to the refinery oil and natural gas corporation can be transported from the oil fields of the Niger Delta: “We will convey the crude by SBMs”. The refined products, nonetheless, would be distributed everywhere in the nation by trucks belonging to such product suppliers as MRS, Total, Mobil, Oando, Forte Oil and several other players.

The PMS, the main gas of transportation, has the biggest share of the refinery’s proposed product mix.
A questionnaire to Dangote Group around this situation had not been answered as we went to press.
In Nigeria, there hasn’t been a nationwide consensus on how much PMS can cost in the market whether it is made in the nation. The only maker of the product has been the chronically inefficient state hydrocarbon firm NNPC. There’s one factor though: the so called landing price of PMS, which is significantly greater than the pump price the federal government permits, is because of a collection of expenses that include those by center males in addition to import tariff. These costs will probably be eliminated by a neighborhood producer, particularly of the dimensions that the Dangote refinery will operate . The referenced Financial Times article reported Mrs. Okonjo- Iweala as saying that the refinery is deliberate in a free zone the place it’ll benefit from tax breaks. All of those oil and natural gas corporation imply that “even without capturing the subsidy it could be producing at near what Nigerians are accustomed to paying, Mrs Okonjo-Iweala says”, reports The Financial Occasions.
It continues to be not clear the place the complex would get the pure gas for input to the fertiliser plant, which was designed with a capability to produce 2.75million tons per annum (MTPA) of ammonia and urea. At that luncheon in November, Dangote introduced a venture referred to as West African E&P, his company’s partnership with First E&P Limited, a Nigerian upstream impartial, which has bought forty% equity in Oil Mining Leases (OMLs) 83 and 85 and forty five% equity in OMLs 71 and seventy two, all offshore and which, mixed, hold a minimum of two trillion cubic ft (2Tcf) of fuel in reserves. The purchases are nonetheless awaiting the consent of Nigeria’s petroleum minister in Abuja. The fuel from these assets nonetheless have to be developed and first gas is unlikely to meet the 2017/2018 on-stream date of the complicated, so the Urea part of the facility could lag behind.
A separate fuel challenge, which he also introduced at the luncheon, is the deliberate 501 kilometre fuel pipeline from Eastern Niger Delta to Western Nigeria.

Clearly, Dangote is now not shy of venturing additional upstream than he had at all times been. The Dangote group was fairly aggressive within the bid for OML 18, from which Shell, ENI and Complete have been divesting and it’s critical about its stake in the West African E&P venture.