Dangote Refinery Shifts Production To October

Dangote Refinery has assured Nigerians that production will commence soon at the plant in October, the S&P Global Commodity Insights report said.

The 650, 000 barrel a day refinery was initially scheduled to start production in July following its commissioning by former President Muhammadu Buhari.

President of Dangote Group, Aliko Dangote promised during the commissioning that the first product from the refinery will be churned out latest by August this year.

Devakumar Edwin, Dangote Group Executive Director, who is overseeing the $19.5 billion refinery, said on Monday that the refinery is now ready to commence production after the short delay.

He said the long-awaited refinery will start with diesel and jet fuel.

According to him, the refinery will not depend solely on crude oil from Nigeria, saying arrangement has been made to buy crude from Russia, Arab Gulf nations, and other crude oil producers in order to be able to meet its target of meeting Nigeria’s domestic fuel consumption.

He said, “Right now, we are ready to receive crude. We are just waiting for the first vessel. And so as soon as it comes in we can start.”

Africa’s largest producer currently imports all of its refined goods, depleting its foreign exchange reserves. However, delays and cost overruns caused many to doubt that Aliko Dangote, Africa’s richest man, would ever deliver. Meanwhile, fuel costs in Nigeria have risen since President Bola Tinubu eliminated an expensive subsidy in late May.

Although the refinery was designed to process light sweet Nigerian crude, state-owned Nigerian National Petroleum Corps, which is a shareholder in the project, cannot supply the refinery until November, Edwin said, so Dangote is buying oil from trading houses.

Vitol and Trafigura recently carried out inspections of the plant, he said.

“At the last minute [NNPC] said, ‘We have actually committed our crude on forward basis to someone else’, so immediately they don’t have the crude,” he said. This is a temporary issue, and the refinery should run on exclusively Nigerian crude by November, he said.

Edwin said the scale of the refinery meant being “solely dependent on Nigerian crude would not be advisable”, meaning the refinery can process most African crudes — apart from heavy Angolan grades — as well as Middle Eastern Arab Light and even US light tight oil.

“We can take even some of the Russian grades… if the global system opens up to allow us to receive [them],” he said.

Although discussions started as far back as 2013, Edwin said Dangote only began physical construction five years ago following a string of delays and mishaps. The first plot of land in a free zone in Ogun state was ditched following potentially “disastrous” political interference, he said.

After buying 33 square km of land in Lagos state for $100 million, the team found more than 70% of the plot was swamp and spent a year clearing it. Then, faced with the possibility of rising sea water claiming the land in the next 70 years, Dangote spent $50 million elevating the land by 1.5 meters. “We had to hire the world’s largest dredger, second largest dredger, and third largest dredger to… pump in about 65 million cubic meters of sand.”

The company also had to construct a port capable of receiving extremely heavy assembled equipment because it lacked the infrastructure to assemble equipment in Nigeria, import 200,000 pikes to prevent sinking, buy 320 cranes and invest in a 10 million ton per year granite quarry.

Ultimately delays proved a blessing, Edwin said, because “we had time to increase the capacity of the refinery [and] improve efficiencies in the design.” What will be the world’s largest single-train refinery began life as a 300,000 b/d project, Edwin said