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Africa’s richest man Aliko Dangote, who is financing the construction of one of the world’s largest oil refineries, believes that the 650,000-bpd facility could be near its full capacity by the middle of 2020, which would be some one and a half years later than the originally planned startup date.
Back in 2016, Dangote, a construction and concrete magnate worth around US$15 billion at that time, told CNNMoney that the refinery would aim to meet all of Nigeria’s daily demand for fuels of up to 550,000 bpd. The excess, he said, would be exported. At that time, some initial works for the refinery were already under way, with plans to bring it online by late 2018.
In mid-2016, Dangote wasn’t worried about low oil prices because refiners win in low oil price environments, as margins are high.
“People who own refineries are the best out there, making money,” Dangote told CNNMoney in June 2016. “The lower the crude oil price, the more profit that you make in terms of refining margin.”
It looks like that the startup date has been pushed out several times.
According to a 2017 PwC report on Nigeria’s refining industry, the Dangote refinery—a crucial development in the sector—was expected to come on stream by 2019. In all of PwC’s scenarios on Nigeria’s refining sector, the Dangote refinery was assumed to “open its gates mid-2019.”
“At optimal utilisation, the refinery is capable of meeting the country’s demand, however a major headwind to achieving a fully optimised run, is availability of crude feedstock,” PwC said.
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“We’re flexible in terms of our feedstock,” Edwin Devakumar, group executive director at Dangote Industries Ltd, told Bloomberg in an interview published today. The refinery will be able to process all the African, American, and Middle Eastern crude grades, as it doesn’t want to be dependent on Nigerian crude, he added.
The Nigerian company has talked to Shell, Vitol, and Trafigura about the oil traders possibly supplying the refinery with crude and buying the refined products, but nothing specific has been decided yet, Devakumar told Bloomberg.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.