Page 5 - AfrOil Week 24 2021

AfrOil COMMENTARY AfrOil

It followed a memorandum of understanding so far achieved considerable milestones consid-
(MoU) that was signed between the parties in ering the global health crisis that hindered the
June 2017, providing for credit facilities of up desirable progress [despite] some delays due to
to $1bn to be extended to Dangote Industries the COVID-19 pandemic”.
and its subsidiaries and for broader fund-rais- He said that project construction had
ing collaboration on the basis that the proposed reached 79%, with overall project completion
plant would “boost intra-African trade volumes, at 89.50% including engineering, procurement
enhance continental value chains, and increase and construction (EPC) work.
production and export of goods and services “At the current rate of progress, the mechan-
across Africa”. ical completion is now expected to be accom-
Dangote Group also became a shareholder in plished by the fourth quarter. Commissioning is
Afreximbank in 2016 after making a “substantial expected to commence immediately” thereafter.
investment” to acquire equity. Once complete, the facility will process
Meanwhile, a local media outlet, the Daily 650,000 bpd of varying grades of light and
Independent, has quoted sources as saying that medium crudes to produce fuels in line with Dangote Group
Dangote is struggling to arrange funds to com- Euro-5 standards. These will comprise 10.4mn became a
plete the project and alleged that it had defaulted tonnes per year of gasoline, 4.6mn tpy of diesel
on a loan repayment. and 4mn tpy of jet fuels. shareholder
Dangote Group refuted the claim and said it Devakumar added that it will also produce
has “always met and continues to fully meet” its 690,000 tpy of polypropylene, 240,000 tpy of in Afreximbank
loan obligations. However, given the importance propane, 32,000 tpy of sulphur and 500,000 tpy
to the Nigerian economy of a timely start-up, of carbon black. in 2016
supporting NNPC’s planned acquisition could While there have previously been concerns
bring multifaceted benefits. about the level of fuel available to Nigerians from
the facility, Edwin said that products would be
Timing split between the Nigerian and export markets,
With all eyes on progress, group executive direc- specifying Europe and South America.
tor at Dangote Industries Devakumar Edwin Meanwhile, the company has previously pro-
reiterated that the facility would be completed vided assurances that the refinery’s purchase of
by the end of December. Nigerian crude would not have an impact on the
Speaking at the Nigeria International Petro- country’s 1.6mn bpd mandatory export volume
leum Summit (NIPS), he said: “The refinery has allocated by OPEC. ™

New approach to illegal refining

According to an advisor to President Buhari, Nigeria’s government is looking to start

authorising and regulating small-scale oil-processing operations in the Niger River Delta

OIL development has been a source of revenue development and sometimes in order to steal
and influence in Nigeria, but it has also been a crude for processing and sale on the black mar-
WHAT: source of tension. ket. Additionally, they have pointed out that
Senator Eta Enang Many of the country’s onshore oilfields are these incidents discourage IOCs from investing
says the government is located in the Niger River Delta, within regions in Nigeria, reduce oil revenues and exacerbate
drawing up plans for where distrust of the federal government runs domestic fuel shortages, since crude diverted to
“artisanal refineries” in strong. Communities within the delta have underground refineries is often made into petro-
the delta region. repeatedly alleged that Abuja deprives the leum products and then sold at below-market
region of its fair share of oil revenue and ignores prices in neighbouring countries.
WHY: the extensive damage that oil companies have The complaints about sabotage and damage
His remarks follow the inflicted on the local environment. They have to pipelines have been echoed by international
signing of an agreement also raised questions about whether officials in oil companies (IOCs) working in Nigeria. This
on a project designed the capital are more concerned about interna- is not surprising, given that these incidents affect
to curb black-market
refining. tional oil companies (IOCs) than about their them directly, causing them to lose both crude
own constituents. and money. The country typically loses about
WHAT NEXT: In return, Nigerian authorities have accused 400,000 barrels per day (bpd) of oil in this man-
BPPT could be linked to communities within the delta of fomenting ner, according to industry analysts. At current
small refineries, but the ethnic strife and civil unrest. They have also prices, this amounts to about $29.6mn per day.
Nigerian government will complained about the local practice of dam- The Nigerian government has been trying
have to clarify its policy. aging and sabotaging oil pipelines and infra- to resolve this long-standing problem in several
structure, sometimes in a bid to protest against ways.

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