Africa’s richest man Aliko Dangote plans to expand the Dangote refinery from its current 650,000 barrels per day (b/d) to 1.4 million b/d, with no specified date for completion.
The funding for the project is expected to come from Middle Eastern sources, putting it on track to surpass the world’s largest 1.36 million b/d refinery in Jamnagar, India.
“At the moment we don’t want too many balls in the air, so I think that we should throw the ones we can handle,” Dangote said, impressing the scale of the new expansion. “We have to tighten our belt and make sure that we know we are doing. It’s a huge, huge undertaking,” he said.
Engineers working at the Lekki complex told S&P Global in an interview that it was designed with room for growth, pointing out empty concrete plots capable of holding a second refining system.
Expanding could involve building a second refinery with the same configuration, one engineer said, potentially with the addition of a vacuum distillation unit to boost light ends yields.
The company is also working on potential linear alkylbenzene and base oils projects, and aims to grow its annual polypropylene capacity from 1 million mt to 1.5 million mt in the next few years, Dangote said.
To expand the refinery and develop a new petrochemicals project in China, Dangote is actively considering a strategic partnership with Middle Eastern companies, the group president remarked.
“Our business concept is going to change. Now instead of being 100% Dangote-owned, we’ll have other partners,” he said.
As the refinery grows, early challenges sourcing crude oil only risk becoming more acute. However, Dangote welcomed a breakthrough deal with NNPC for alleviating supply concerns.
Under a current “crude for naira” swap agreement, NNPC supplies Dangote with 14 crude oil cargoes, or sources the equivalent value of US dollars, in exchange for the same volume of gasoline and gasoil to be supplied in the domestic currency.
Dangote’s upstream assets in the Niger Delta, Oil Mining Lease 71 and 72, could provide another supply injection, with production expected to start this month and reach up to 40,000 b/d.
Within the next year, the refining business will list 5%-10% of its shares on the Nigerian stock exchange (NGX), Dangote said, mirroring a playbook established by the group’s cement and sugar businesses.
“We don’t want to keep more than 65%-70%,” Dangote said, explaining that shares will be offered incrementally subject to investor appetite and market depth.
The door remains open for Nigerian National Petroleum Co. to boost its stake after the state oil company trimmed its interest to 7.2%, Dangote said, but not before its next phase of growth is well underway.
“I want to demonstrate what this refinery can do, then we can sit down and talk,” Dangote said. A close aide, who was not authorized to speak publicly, said the company would exert caution before inviting additional participation from NNPC.
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