Dangote refinery plans 5.3bn litres fuel storage

Alhaji Aliko Dangote, the president of the Dangote Group, has announced plans to increase his refinery's storage capacity by 600 million litres.

He claims that this will allow the refinery to have 5.3 billion litres of storage capacity.
At present, the refined petroleum products can be stored in 4.78 billion litres at the Dangote Petrochemical Refinery.

On Wednesday, Dangote delivered a speech at the Afreximbank Annual Meetings and AfriCaribbean Trade & Investment Forum held in Nassau, Bahamas.

The billionaire claimed that because foreign oil companies did not want him to succeed, they would not sell crude oil to his refinery.

When asked if his refinery would lower the price of petrol at the pump, which is currently about N700 per litre, Dangote did not respond positively, but he did quickly narrate how the price of diesel dropped from N1,700 to N1,200 as his diesel oversupplied the market.

"There's no denying that the petrol issue is distinct. The government is taking care of that one. I'll give you an example, though. When we first started, the diesel that is used by industries, transporters, and everyone else cost N1,700, and the conversion from dollars was roughly N1,200. We reduced the price to N1,000 as soon as we began, and within two weeks. From N1,700 to N1,200 and from N1,200 to N1,700, we took it. we have given more than 60 per cent drop in price.

The refinery will serve as a strategic reserve for refined products, according to the business mogul.

It is extremely risky that the nation lacks strategic petrol reserves. However, we had only 4.78 billion litres of different tankage capacity in our plant when you arrived. However, we are currently adding 600 million more.

"Therefore, going forward, the refinery will serve as the nation's strategic reserve for petroleum products," he said.

The richest man in Africa revealed that foreign oil companies refused to let him use their crude because they did not think he could successfully operate a refinery capable of producing 650,000 barrels per day.

In a system where individuals have been accustomed to counting good money for 35 years, and all of a sudden, they see that the days of counting that money have come to an end, you don’t expect them to pray for you. Of course, you expect them to fight back.
And I believe that's the actual process we're currently going through. In actuality, though, this refinery is necessary for the nation, the subregion, and the continent of sub-Saharan Africa. You anticipate that they will fight through a lack of crude supplies and product purchases, but I believe that these measures are only temporary. We'll arrive," he continued.

In order to supply feedstock for the refinery, Dangote has been importing crude oil from the United States.

The businessman, who was born in Kano, went on to say that Nigeria has been importing dirty fuel for a long time.

Dangote requested that rules prohibiting the importation of unclean fuels be enforced by the federal government.

According to him, a large number of cancer cases in Nigeria and throughout Africa can be attributed to dirty fuels.

"It is high in sulphur, very polluting, and when you look at it, especially in Nigeria, we've been having cases of cancer in the past few years, and most of these cases of cancer have to do with the bad fuel that we've been using," he said in reference to imported fuel. Thus, even now, I would advise you to examine the quality of the waste being disposed of in your Caribbean region.

He went on to say that although Nigeria imports the dirtiest fuels, its crude oil commands the highest premium.

Dangote responded, "Now that there is regulation, it is upon the regulators to enforce the regulation," when asked if there was no regulation in place to check the quality of fuel imported.

Nigeria still relies significantly on imported refined fuel despite having enormous reserves of crude oil.

However, Dangote recently declared that by the time he starts selling PMS in the coming weeks, Nigeria will no longer import any fuel.

Dangote revealed that, once fully operational, the refinery would provide the Caribbean with cheaper fuel, as fuel prices there are high.

In order to provide the area with more affordable energy, he intended to build a terminal there.

"I'm not sure of the precise cost, but I am aware that petroleum products are highly expensive in the Caribbean. Thus, we can create it at a low cost, transport it here whenever needed, establish a terminal, and we will be able to feed their needs.

“We have a bilateral agreement with them and bringing in stuff from there is not more than 18, 20 days maximum. Once we set up a terminal, they will have very cheap oil. They will have cheap energy. By having cheap energy, their economies will grow faster,” he maintained.
Dangote recalled that Khalid Al-Falih, a former Saudi Arabian minister of energy, had once convinced him to abandon the idea of constructing a refinery. He claimed, though, that he informed the former minister that he didn't require his counsel.

"I was invited to break the fast with Dr. Falih, the former Minister of Energy, when I was in Saudi Arabia four years ago during the fasting period. I accepted his invitation and broke the fast with him. "Aliko, I heard that you're planning to build a refinery. What capacity?" he exclaimed. I mentioned 650,000. After a period of silence, he said, "You know, we are building one and it's about 120 km from Mecca." I think I would like you to go and have a look. We as Saudi Aramco, are facing a lot of challenges and, we are proceeding with it, but my advice to you is not to do it because normally, refineries are built by major oil corporations or sovereign countries.’
"But Your Excellency, regrettably, we've already begun, so I'm not looking for advice," I said. That's actually how we carried on," he recalled.

Dangote disclosed that cartels, referring to them as the “mafia,” both domestic and foreign, had repeatedly attempted to undermine the $19 billion refinery project that was being built in Lagos.

"Well, I was aware that a fight would break out. However, I was unaware that the mafia in oil possesses greater power than the mafia in drugs. That's something I can confirm. It is a fact, he acknowledged.

Dangote, who prided himself on being a fighter, claimed that numerous attempts were made to stop him.

Indeed, during the COVID-19 pandemic, certain global banks eagerly anticipated ensuring that they push us into default of our loans so that the project will just be dead. And that didn’t happen with the help of banks like Afreximbank,” it was stated.

He explained that he had paid off $2.4bn of the $5.5bn loan for his $19bn Lagos-based refinery.
"Using our balance sheet as a guide, we borrowed the funds. We borrowed, I believe, slightly more than $5.5 billion. However, we also had to pay a lot of interest as we went along since there wasn't enough land for the project, and the sand-filling process took a long time. For approximately five years, we took no action.

"We got going in 2018." That's how much we borrowed. Of course, we have already paid roughly $2.4 billion in principal and interest. We've performed admirably. There is currently only roughly $2.7 billion outstanding. Therefore, for a project of that size, we've done really well," he remarked.

1,500 MW are produced by Dangote.

In his discussion of industries becoming energy independent, Dangote asserted that his refinery and the businesses he owns do not put any strain on the grid, but he did suggest that power production is a business best left to others.

"We don't strain the grid in any way. We generate 1,500 megawatts of electricity for our own consumption, just like we do now. However, if this is a good idea and makes sense, some people will focus on producing the power themselves, which means the cost will not be incurred by you. Many people are creating industrial parks, and I believe Afrexim Bank is providing funding for these projects, which will be beneficial. It implies that you will simply plug in once you arrive and play,” he added.
The Dangote Petroleum Refinery and other domestic producers are expected to begin massive production of Premium Motor Spirit, or petrol, on Sunday, according to operators of modular refineries. The price per litre is expected to drop to approximately N300.

Speaking on behalf of the Crude Oil Refinery Owners Association of Nigeria, they clarified that once petrol is produced in large quantities in Nigeria, it will affect petrol prices in the same way that it did for diesel after Dangote began producing it.

According to CORAN Publicity Secretary Eche Idoko, "many companies today profit from the importation of petroleum products at the expense of Nigerians."

He informed our correspondent that "if we start manufacturing PMS today in significant quantities, given there is sufficient crude oil supply, I can assure that we should be able to buy PMS at N300/litre as the pump price.
Why force Nigerians to pay nearly N700 per litre when you know that the price will drop if refineries are allowed to operate? Is it your intention to appease the foreign refiners who profit greatly from us?

The CORAN official insisted that petrol prices would skyrocket once it is produced in large quantities by domestic refiners, despite arguments that such a price drop is not feasible bec