‘Why Dangote is building world’s biggest refinery’
The Dangote Group is building the largest single train petroleum refinery in the world with a production capacity of about 650,000 barrels per day. Edwin Devakumar, Group Executive Director at Dangote Industries, spoke to CNBC Africa’s Esther Awoniyi about the project.
A very big project worth about $12 billion dollars, that’s the refinery and the petrochemical plant. Bring us up to speed on where we are right now.
The petrochemical complex comprises of fertilisers as well as the petrochemicals. The fertiliser plant is gas based and it will produce ammonia and urea and it’s the world largest with an output of 3 million tonnes per annum coming out from one location and it’s likely to be complete by the end of the year. The mechanical construction is ongoing, and we have another 6 months of the window left to complete and everything is on target. The second is the refinery which is the largest single train refinery in the world. The largest today has a capacity of about 450,000 barrels per day, and we are building a 650,000 barrel per day facility so imagine the enormity of our project.
It will also have a petrochemical complex to produce about 1.2 million tonnes of polypropylene and polyethylene per annum. The current refining capacity in Nigeria is 445,000 barrel today and we’ll be doing 650,000 barrels. And today we’re doing less than 10 per cent capacity in the existing refineries, so the new refinery will meet the entire requirements of gasoline, aviation fuel, kerosene and diesel of Nigeria and we will have surplus to export for each of these products. The project’s status? We’ve just commenced the civil works. As you know it is a huge project, as I said, about a million tonnes of cement, half a million tonnes of steel, 2000 kilometres of pipeline, 7000 kilometres of electrical cables and half a million cubic metres of concrete. It is a huge project and there’s a third project coming up with 1,100 kilometres of subsea gas pipeline to handle maybe 3 bcf of gas per day. To give you an idea the NLNG capacity is 3 billion standard cubic feet, another 2 billion is being reinjected, 1 billion is being flared. The problem today is that every body talks about flaring or the unavailability of gas, but gas is available it is just that there is no infrastructure in the sea.
But what about regulation? Just recently the gas master plan was in the news again, and we’ve talked about the power grids, and execution, and how it will affect market dynamics and the players, but you don’t seem that concerned about it…
The problem is that today on shore drilling is virtually non-existent because of problems on the ground, so people are either in shallow waters, or deep see drilling. You have associated gas that’s coming up or you hit pure gas wells but there’s no way to access it. It is much easier with crude. So you have to cap the well, reinject it or flare it. So we are creating infrastructure inside the pipeline, just like a road network on the ground, it’s a pipeline network in the sea and we bring everything to the same process site and then we process the gas and we can sell it off. This kind of pipeline network is the largest within our country.
All of this is obviously going to be very very expensive, can you talk us through some of the ways that they’re being funded?
Well, if you take the refinery per say which is the biggest project activity. As you know, a couple of years ago we raised project financing to the tune of about $2.3 billion then we’re bringing in our own equity capital and the third one is the export trade agencies, because today, with the global economy being what it is all manufacturers are economically in a bad situation so whether it is Belgium, Italy, the United Kingdom and India… Everybody is keen that their companies should get a share of the business, and those export agencies from the relevant countries are willing to fund their activity.
You have also said that this project when completed will help the company save billions in forex. Tell us a bit more about that.
Straight away in exports alone from the petroleum refinery will be to the tune of about $5.5 billion and savings in terms of the input of finished products will be to the tune of about $7.5 billon. So or net savings should amount to $13 billion. This is only for the refinery. We have the petrochemical complex and the fertiliser complex. The whole of subsaharn Africa consumes 5 million tonnes and we’ll be producing 3 million tonnes so huge amounts of fertilisers and petrochemicals will be exported. The net foreign exchange earnings and forex outflow to import the products which is the primary problem today won’t be there any longer.