MOSCOW (MRC) -- Nigeria has given its state oil firm the green light to acquire a 20% stake in Dangote's oil refinery for USD2.76 billion, reported Reuters with reference to junior oil minister Timipre Sylva's statement.
The 650,000-barrel-per-day oil refinery, owned by Africa's richest man Aliko Dangote, is under construction in Lagos, the biggest city in the most fuel-consuming nation in the region. The refinery is scheduled for commissioning by January.
Sylva said the government approved the Nigerian National Petroleum Corp's (NNPC) acquisition at a Cabinet meeting, he told reporters in Abuja, adding that the country also awarded contracts for the modernisation of two state-owned refineries.
The has said the NNPC's move to work with private companies was in line with safeguarding the country's energy security and would not undercut plans to rehabilitate its own refineries.
The NNPC said in June it had signed term sheets with Dangote Group for the stake in its USD19 billion oil refinery and is in talks with banks to borrow to buy the stake but would require government approval of the plan. The Dangote Group has previously said NNPC and three other firms had approached it regarding a stake purchase, to be able to secure crude supply agreements.
Nigeria, Africa's biggest crude oil exporter, imports virtually all its fuel due to moribund state refineries, which has prompted NNPC's interest in Dangote's oil refinery.
In March, Nigeria approved US1.5 billion of spending on the modernisation of the Port Harcourt oil refinery and awarded a contract to Italy's Tecnimont. Sylva said 15% of the contract sum has been paid and work has started in Port Harcourt. He added that the Cabinet approved contract awards for the upgrade of the Warri and Kaduna refineries to Saipem SpA and Saipem Contracting Ltd for USD1.484 billion.
As MRC informed before, Africa's largest oil refinery will deliver its fuels to Nigerian consumers via roads and sea ports, and will effectively replace all of Nigeria's fuel imports once fully operational. The 650,000 barrel-per-day Dangote oil refinery is under construction in Lagos, the biggest city in the most fuel-consuming nation in the region, which absorbed 266,000 barrels of petroleum products per day as of 2015. Congested ports and dilapidated roads led some to expect that the company would build a pipeline or other method of getting its fuel to consumers.
The Dangote group is also eyeing ethanol production at its sugar and molasses plant in Adamawa state, and has facilities at the refinery to blend ethanol with fuel if needed. Edwin said they are also already considering expanding plastics and petrochemical productions at the refinery, which will make polyethylene (PE) and polypropylene (PP) when it begins production.
Ethylene and propylene are the main feedstocks for the production of PE and PP, respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High density polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.