Dangote Refinery to start with 350,000bpd crude, list on NGX — CEO

The President of  Dangote Group, Aliko Dangote has said that Dangote Refinery in Lekki, Lagos, would start with the refining of 350,000 barrels per day of crude oil ,even as  he unveiled  plans to list the  $20 billion oil refinery on the Nigerian Exchange Limited (NGX).

Dangote, who disclosed this during an interview with the Financial Times, also stated that the refinery would receive about six million barrels of crude in December 2023.

“We’re starting with 350,000 barrels a day, “Dangote told the Financial Times, adding that a deal had already been clinched for the “first cargo of about 6mn barrels” for delivery next month, adding that the refinery would eventually be floated as a separate company, he said, initially on NGX.

Dangote said he believed the refinery could reach its capacity of 650,000 barrels a day by the end of 2024, although the IMF has said it doubts it will reach more than a third of that by 2025.

At full tilt, the refinery, the world’s largest “single train” facility with just one distillation unit, could save Nigeria billions in foreign exchange currently spent on imported fuel.

It was “shameful”, Dangote said, that Nigeria, a major oil producer for more than 50 years, could not refine its own crude in anything like sufficient quantity.

Dangote conceded there were times when he thought the massive project — long delayed and about $8bn over budget — might jeopardise his business empire.

“The challenges that we faced, I don’t know whether other people can face these challenges and even survive,” he said. “It’s either we sink or we sail through. And we thank the Almighty that at least we’ve arrived at the destination.”

Yet in what is supposed to be Dangote’s moment of triumph, he finds himself under intense pressure. A rival industrialist has accused him of underhand business practices and of gaining unfair access to foreign exchange from a central bank whose former governor is now being investigated by the authorities. Dangote has denied both allegations.

In addition, the Nigerian National Petroleum Corporation (NNPC) has been unable or unwilling to supply him with the crude his refinery needs, although Dangote insists it is only a matter of weeks before oil starts flowing.

A few even doubt the refinery will work at all, or predict that it will be inefficient. Rumours are also rife that Dangote, whom critics accuse of having unduly benefited from close relations with four successive administrations, has fallen out with Bola Tinubu, who became president in May.

In the interview, Dangote complained that rivals were complaining because they did not understand what it took to run a business that was the country’s biggest private-sector employer and its biggest taxpayer. “Sometimes when people talk about us, it’s like the government is holding everybody down and allowing us alone to fly.”

He did not want to discuss in detail a tussle over the supply of crude with NNPC, which owns 20 per cent of the refinery after a $2.76billion equity purchase in 2021. Nigeria produces about 1.4 million barrels of oil a day, well short of its OPEC quota of 1.8 million barrels, with much pre-sold in forward contracts.

“Let’s not have the blame game here,” he said of NNPC’s reported difficulties in meeting the refinery’s requirements. “We have resolved all the issues of supply.”

Dangote rejected suggestions that NNPC was playing hardball to negotiate a bigger share of the refinery, which he said would generate revenue of $25billion a year at full capacity. “I don’t think NNPC needs to buy more shares. I think they’re OK with what we’ve given them.”

The refinery would eventually be floated as a separate company, he said, initially on the Lagos stock exchange.

This move marks a significant step forward for Dangote Industries, Africa’s largest conglomerate.

 Dangote confirmed that the company has overcome challenges related to crude oil supply, paving the way for the refinery’s listing.

The listing is expected to boost investor confidence and unlock further growth opportunities for Dangote Industries.

“We have resolved all the issues with crude oil supply,” Dangote stated. “We are now ready to move forward with our plans to list the refinery on the Nigerian Exchange Limited.”

Dangote also expressed his vision for the refinery to eventually become an independent entity, further solidifying its position as a leading player in the global oil and gas industry.

The listing of the Dangote Refinery on the NGX is expected to attract a wide range of investors, both domestic and international. It will also boost the liquidity of the Nigerian stock market and enhance its reputation as a regional investment hub.

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