Dangote Refinery Completes Basic Engineering Work To Deliver On Expansion Target

Critical aspects of engineering work that will support smooth transition to enhanced operational target has been completed by Dangote refinery.

This scope of work has opened opportunity for accelerated completion of 1.4 million barrels a day (bpd) target growth in the next phase of the refinery’s expansion process by 2029.

The refinery is currently operating at 700,000 bpd.

Mr Devakumar Edwin, Group Vice President, Oil and Gas and Fertiliser, Dangote Industries Ltd., gave the update during a tour of the refinery by newsmen in Lagos yesterday.

Edwin said basic engineering for the expansion had been completed, with almost all detailed engineering work also concluded as he confirmed that most equipment had been ordered, while major contracts had been signed and advance payments made to contractors.

“We are targeting for three years, and probably we may be even doing faster,” he said.

According to him, the expansion will cost slightly less than the first phase because key supporting infrastructure, including the quarry, welding-gas plant, port facility and developed land, is already available.

Edwin said the company was also negotiating lower engineering and design costs, as much of the expansion would replicate existing facilities.

He, however, said additional petrochemical facilities would raise the overall cost of the project.

Edwin said the refinery, originally designed for 650,000 bpd, is currently operating at about 700,000 bpd.

He said the refinery was designed to process a wide range of crude grades, including most African crude grades and U.S. West Texas Intermediate, to reduce dependence on Nigerian crude.

“We have designed it to have a wider range of crudes which can be processed in the refinery,” he said.

Edwin said the flexibility was necessary because much of Nigeria’s crude had initially been committed under existing obligations.

He said the refinery was also configured to maximise petrol output in line with Nigeria’s consumption pattern, with petrol accounting for 53 per cent of its production capacity, compared with about 22 per cent in conventional Nigerian refineries.

“We designed it in such a way that 95 per cent of our production is high-value, either petrol or diesel or jet fuel,” he said.

He said the remaining five per cent comprised lower-value industrial products, adding that the refinery was designed to produce Euro 5 and Euro 6-standard petroleum products for domestic and international markets.

According to him, the refinery currently exports petrol, aviation fuel and diesel to markets in the United States, Europe and other regions.

Edwin said the expansion would also increase petrochemical production, including linear alkyl benzene, base oil and polypropylene.

He said more than 70 per cent of the refinery was automated, with major processing units controlled from the main control room.

It was also observed that work on the expansion was underway within the refinery complex.

The expansion comes as Dangote Petroleum Refinery and Petrochemicals seeks to raise about ₦2.15 trillion through an ongoing initial public offering (IPO), with proceeds expected to fund the capacity expansion.

LEADERSHIP reports that the expansion is underpinned by rising regional demand with interest from Ghana, Angola and others and the refinery’s current capacity is not enough to meet demand.

The expansion will also involve increasing polypropylene output from 900,000 tons a year ( t/yr ) to 2.4mn t/yr, boosting linear alkyl benzene production, and adding base oil capacity.

The success of refined product exports to Europe, the US and Brazil — particularly jet fuel has encouraged the company to pursue winter-grade diesel production and raise fuel quality from Euro V to Euro VI.

The expansion is expected to be financed through operating cash flow, the public listing, and one or two strategic investors.

But securing sufficient domestic crude remains a challenge as the company has repeatedly said it is not receiving enough Nigerian crude for its existing plant, despite benefiting from a presidential programme under which state-owned NNPC sells crude to the refinery in local currency.

Dangote said the decision to proceed with expansion was encouraged by President Bola Tinubu’s push to raise Nigeria’s crude output to 2.4mn b/d and a new policy vision to process all domestic crude locally and export only refined products.

The new 750,000 b/d line will be highly flexible in the types of crude it can process.

Nigeria’s 2021 petroleum law sets crude supply to domestic refineries on a “willing seller and willing buyer” basis.

Dangote claims the upstream regulator and international oil companies have used this principle to bypass the spirit of the law, which he said was intended to apply to companies producing crude and refined products in Nigeria — “not a trading company outside Nigeria’s shores”.

A bill to amend the Petroleum Industry Act passed its first reading in Nigeria’s senate earlier this month. Dangote welcomed the move and said he hopes it will close loopholes being exploited by crude exporters.