Nigeria's Dangote expects new oil refinery to account for half of group assets

Record ID: 1136960

  • Title: Nigeria's Dangote expects new oil refinery to account for half of group assets
  • Date: 6th July 2018
  • Summary: LAGOS, NIGERIA (JULY 6, 2018) (REUTERS) WIDE OF REFINERY CONSTRUCTION SITE VARIOUS OF MEN WORKING AT REFINERY CONSTRUCTION SITE MAN WORKING AT SITE SIGN READING (English): "DANGER CONFINED SPACE IN PROGRESS, AUTHORIZED PERSONS ONLY" VARIOUS OF REFINERY EQUIPMENT ON SITE VARIOUS OF DANGOTE GROUP EXECUTIVE DIRECTOR, DEVAKUMAR EDWIN, TALKING TO A REPORTER (SOUNDBITE) (English
  • Embargoed: 20th July 2018 15:50
  • Keywords: Aliko Dangote Dangote Group refinery oil gas
  • Location: LAGOS, NIGERIA
  • City: LAGOS, NIGERIA
  • Country: Nigeria
  • Topics: Company News Markets,Economic Events
  • Reuters ID: LVA0018NM23IV
  • Aspect Ratio: 16:9
  • Story Text: An oil refinery being built by Aliko Dangote will account for half of his conglomerate's assets when it is finished next year, a senior executive told Reuters, underscoring the scale of the bet being made by Africa's richest man on Nigerian oil and gas.
    Dangote has built his fortune on cement, although his sprawling business empire also spans flour milling, agriculture and real estate. Now he is building the world's largest single oil refinery and also expanding into fertiliser, aiming to address long-standing problems in Nigeria's energy markets.
    Though Africa's biggest crude oil producer, Nigeria imports almost all of its gasoline due to poor maintenance of its four state-owned refineries.
    Dangote hopes to meet the fuel needs of Africa's most populous nation, where poor power supply forces families and businesses to rely on diesel-powered generators.
    Dangote Group Executive Director Devakumar Edwin said the $10 billion refinery should be completed by December 2019.
    "We will bring the project to a mechanical completion of the refinery by December next year and start commissioning the project from early 2020 and the refinery is also unique, because of the supply chain. We really want to be independent upon any single type of out sourcing of crude, so the refinery is designed to handle all the African crude, part of the Middle East crude, and the American crude, so we have a wide flexibility depending on the prevailing market prices, we can source the crude from different sources to have a very optimum cost," he told Reuters in an interview at the site in the Lekki district of southwestern Lagos state.
    Dangote Cement, Nigeria's biggest listed company, has attracted investment from Dubai and South African sovereign funds. It posted a 2017 profit of 289.6 billion naira ($920.8 million), up 60 percent on 2016, and is valued at $4 billion.
    Edwin said the oil refinery, with capacity to produce 650,000 tonnes, would also target export markets.
    "Our primary focus is of course Nigeria, to meet the entire local demand. But our capacity is so large, we can export more than 50 percent of our production outside. So the secondary focus will be on Western Africa and Central Africa, but we can also for example, gasoline is in demand in Brazil, we can export its short sailing and aviation jet is in huge demand in Europe, we can export, but to meet those qualities, you need a very high quality product. The product has to be of Eurofied quality if you have to export to any of the Western countries. So the refinery is tuned to produce Eurofied grade," he added.
    Edwin said the company had held talks with firms including Vitol and Shell over the supply of crude and lifting of petroleum products for sale abroad.
    The Dangote refinery will be able to process different grades of crude including shale oil.
    The company is borrowing $3.3 billion for the project, arranged by Standard Chartered Bank. The remainder will be funded by equity and through export agencies, Edwin said.
    Dangote has also acquired two oil fields in Nigeria from Shell to help supply the refinery.
    "We have an opportunity especially in sub-saharan Africa to focus inwards and develop our own manufacturing base. So it has got no immediate relevance to the trade war because we are exporting primarily commodities, so it is not going to have an impact. Other areas which could have an impact is exporting agricultural products because their farmers could be displaced from jobs. We are not exporting agricultural products to them, so the trade war is not going to have a negative impact. But on the positive side, it may open up an opportunity to some extent to say manufacturing and taking the produced goods, because if there is restriction on China exporting their finished goods into the US market, now the window is opening we can develop our own manufacturing base and then take the product," he added.
    Dangote will consider listing the oil refinery once it comes onstream, Edwin added.
    He said that would follow a planned listing of the cement company in London next year after elections in Nigeria. That listing has been mooted for a number of years.
    Plans have been delayed to enable the company to meet requirements for the listing, which Edwin said had been completed. He said the listing could help it fund acquisitions overseas.
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