Nigeria’s Dangote Industries said its planned 400,000 b/d oil refinery will target West African markets, tapping into the existing low refining capacity in the region to sell it oil products.
Dangote early this month signed a $3.3 billion loan with a consortium of banks to finance the construction of Africa’s largest refinery, and petrochemicals and fertilizer plants. The total cost of the project is put at
|Billionaire, Aliko dangote|
“Our primary target is the West African regional market because we know that the refining capacity in sub-Saharan Africa is grossly insufficient,” Dangote said Wednesday in response to emailed questions from Platts.
“Our strategic plan is for other African countries to buy petroleum products from our refinery when it is completed by 2016,” Dangote said.
Dangote said earlier this month that the proposed refinery, to be constructed in Nigeria’s southwestern Ondo state by US-based engineering firm Honeywell UOP, will utilize Nigerian crude grades and help Nigeria cut its current oil products imports by some 50 percent.
Nigeria is Africa’s top crude oil producer but its four state-run refineries, three in the Niger Delta and one in northern city of Kaduna, are running at less than three-quarters of their total nameplate capacity of 445,000 b/d, forcing the country to import 80 percent of is refined products.
Many local analysts say Nigeria’s bid to increase its refining capacity through private investors has been largely unsuccessful because of the government’s regulated regime of domestic prices of fuel, which leaves no room for economic returns on investment.
They cite the stalled take-off of other greenfield refinery projects agreed with private investors in the past two years including three projects proposed by Chinese investors and Vulcan Petroleum Resources, which have not moved beyond feasibility studies.
Dangote, however, said its refinery would purchase crude feedstock from Nigeria at prevailing international market prices, and that it would sell the oil products to traders like Trafigura, as well as to local marketers, at market rates.
It said Nigeria’s delay in implementing reforms of its downstream oil sector and abolishing fuel subsidies, will not derail its refinery project.
“We are not concerned about the regulated price regime of petroleum products. The marketers are the ones to deal with collecting subsidies from the federal government,” it said.
“With or without deregulation, there is nothing stopping anyone from building a refinery in Nigeria.”