Nigeria’s Oil Refinery
The Dangote Petroleum Refinery and Petrochemicals is a 650,000 barrels per day (BPD) integrated refinery located in the Lekki Free Zone of Ibeju Lekki Lagos, Nigeria. It is Africa’s biggest oil refinery and the world’s biggest single train facility. Significantly the Pipeline Infrastructure at the Dangote Petroleum Refinery is the largest in the world, with 1,100 km to handle 3 Billion Standard Cubic Foot of gas per day. The Refinery is powered by a 435 MW Power Plant to meet the total power requirement of Ibadan DisCo.
Credit;The Whistler
The Refinery is designed to cater the entire Nigerian requirement of all refined products and have a surplus of each of these products for export. The Dangote Petroleum Refinery is a multi-billion-dollar project that will create a market for USD $ 21 Billion annually of Nigerian Crude and serves as a globally integrated refining hub capable of adjusting its crude slate and product output in response to market dynamics. The refinery has the ability to process other crudes and sources about 40 % of its feedstock from international markets as part of a deliberately structured “ flexible, trading-led merchant refinery” model as elaborated by its Chief Executive Officer, David Bird.
Credit;Policy Center for The New South
International Refining Hubs Monopoly
The refinery has been structured along the lines of major international refining hubs such as Rotterdam and Singapore, centres known for maritime access, diversified crude sourcing and extensive export networks. Unlike vertically integrated oil companies that own upstream production assets and feed crude directly into their refineries, the Dangote facility does not control oil fields. Instead, it procures crude and intermediate feedstocks from multiple sources, local and foreign, solely due to commercial considerations. This is not a “tramline refinery” commonly found in oil-producing countries , facilities typically situated at the end of domestic pipelines and configured to process a narrow range of local crude grades. To its credit the refinery has processed more than 25 different crude grades and about 10 intermediate feedstocks since commencing operations yet lacks a dedicated upstream supply. The downside is that the refinery is exposed to fluctuations in global crude prices, exchange rate movements and refining margins, commonly measured by the crack spread , the differential between crude input costs and refined product prices . A merchant refinery operating without this exposure means that its pricing behaviour is closely aligned with global oil market trends, particularly in Nigeria’s post-subsidy environment where domestic fuel prices are increasingly market-determined.
Refinery Configuration
The refinery’s configuration includes a large crude distillation unit complemented by multiple upgrading and treatment units namely hydrocrackers , reformers and catalytic crackers designed to convert heavier fractions and intermediate materials into finished petroleum products. This complex configuration allows the plant to adjust its product slate depending on market demand and feedstock economics, enhancing operational flexibility and margin optimisation. High-sulphur blendstocks, may be imported, they are not sold directly into the market and further processed and upgraded within the refinery before being released as finished products. Gasoline produced is Euro 5, 50 parts-per-million sulphur gasoline.
Africa’s Richest Family
Credit;Dangote Group
Nigerian businessman the 67 year old Aliko Dangote , is estimated to be worth $ 23.8 billion. His likely successor is his daughter Halima Dangote entrusted by him to administer corporate governance, commercial strategy and global investment leadership.
Chinese & Indian Involvement
The major contractor designated for the project was China’s state-owned China National Engineering Corporation (CNCEC) under a USD $ 520 million contract. A state owned Indian firm called Indian Engineers Limited was awarded a USD $ 139 million contract for the provision of project management services for the refinery and polypropylene plant. The refinery is supplied with crude oil by the largest sub-sea pipeline infrastructure of the world (1,100 km long) , 2 crude Single Point Mooring (SPM) and 4 subsea pipelines for products exports and imports . The Dangote Group is one of the concessionaires under the concession arrangement for private sector involvement in the management of Nigerian sea ports. Under its wholly-owned subsidiary, Green View Development Services Limited, the Group currently manages a terminal of the Apapa Port, Lagos operating stevedoring, terminal operations and bulk cargo operations.
Credit;Business Insider Africa
Credit;Forbes
Pakistan has two refineries located at Korangi coastal area , between its two main ports . However both refineries have failed to make any significant impact on the ports energy and hydrocarbon infrastructure and investment in upgrading and international crude and refined petroleum products trade and bunkering is dismally inadequate . No alternate subsea pipelines have been laid to reduce traffic congestion and mitigate road environmental degradation . Direct maritime access to the refineries is non-existent and the surrounding area is captured by commercial or housing estates .These refineries configuration is not being adapted to cater to Russian or other crude except the crude produced locally or imported from the Gulf countries.
Author ; Nadir Mumtaz
Blue Economy Trademark (IPO)
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