In Nigeria, plans for the world’s largest refinery
2 months ago, 10 Oct 11:08
On any given weekday, commuters in Lagos, Nigeria’s commercial capital, are snarled in traffic for hours.
Container trucks and tankers take up several lanes of traffic on the major thoroughfares close to the city’s ports. Often these trucks have been parked on the highways overnight.
Cars and minivans snake along the remaining single lane, sharing it with pedestrians fighting off early-morning road rage as they slowly make their way from one end of the city to another. There is a palpable fear of accidents, or a spill. Much of Lagos is an environmental disaster waiting to happen.
It is here in this vibrant metropolis of 21 million people that Africa’s richest person, Aliko Dangote, is undertaking his most audacious gamble yet.
Dangote is building a $12 billion oil refinery on 6,180 acres of swampland that, if successful, could transform Nigeria’s corrupt and underperforming petroleum industry. It is an entrenched system that some say has contributed to millions languishing in poverty and bled the “giant of Africa” for decades.
Planned as the world’s largest refinery, Dangote’s project is set in a free-trade zone between the Atlantic Ocean and the Lekki Lagoon, an hour outside the city center. The site employs thousands, and upon completion — Dangote says in 2020; some analysts suggest more likely in 2022 — should process 650,000 barrels of crude oil daily.
That’s enough oil to supply gasoline and kerosene to all 190 million Nigerians and still have plenty to export. By the end of this year, the facility is expected to churn out 3 million tons of fertilizer. The production of diesel, aviation fuel and plastics will then follow.
Indeed, some 7,000 employees are working around the clock on the site, many arriving by private ferry from the city centre. Another 900 Nigerian engineers and technicians are being trained abroad for jobs at the refinery.
Dangote, whose net worth is estimated at $11.2 billion, has had to build a port, jetty and roads to accommodate this project, along with new energy plants to power it all.
Nigeria’s government, despite being a longtime crude oil exporter, has four underperforming and frequently broken down refineries with a combined capacity of 445,000 barrels daily. Those refineries — two in the oil hub of Port Harcourt, one in Warri in the Niger Delta, and the other in the northern city of Kaduna — are all operating at less than 50 per cent of capacity.
Which means that even though Nigeria is Africa’s largest oil producer, petroleum for everyday use must be imported. This has spawned fuel importers and diesel traders who have grown extremely wealthy.
Nigeria’s government subsidises fuel imports to keep pump prices low, and this has contributed to Nigeria’s well-documented culture of petroleum industry corruption.
“The failure to produce refined products over the last 25 years has created a huge architecture of graft and corruption around everything,” said Antony Goldman, the co-founder of the London-based Nigeria specialists ProMedia Consulting.
Goldman does political risk analysis in West Africa and has worked in and out of Nigeria for ...
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