Long before the 2020 date that has been set for Dangote
Refinery’s commencement of operation, its major competitors have been
identified. Interestingly, the competitors are not some major refineries owned
by some of the world’s biggest energy companies. Instead, they are modular
refineries.
A recent Bloomberg analysis described the Government-backed
modular refineries as ‘a swarm of tiny challengers’ which Africa’s richest man,
Aliko Dangote, would have to contend with as he prepares to launch Dangote Refineries.
Mr Dangote has put down some billions of dollars in what can
best be described as a strategic and timely investment in the Nigerian oil and
gas sector; building a world-class, state of the art refinery (the biggest in
Africa), which is expected to refine as much as 650,000 barrel of crude per
day.
Nigeria is trying to solve a long-standing problem once and
for all
The Nigerian Government is trying hard to solve its
long-standing problem of over-dependence on fuel importation. This has become a
source of disgrace to the oil-rich OPEC member whose state-owned refineries are
non-functional.
It is expected that by 2020 when Dangote’s eagerly-awaited
refinery project is finally completed, it would go a long way in solving this
problem.
In the same vein, the modular refineries could also go a
long way in solving the problem. Already, the Federal Government has licensed
about forty of such refineries, ten of which have reached advanced stages of
development.
As we reported, the Government’s commitment to the modular
refinery project informed its recent decision to borrow some $500 million from
the Export-Import Bank of China (CEXIM). With these developments, it has been
projected that Nigeria could end up exporting about 300,000 barrels of refined
petroleum product by 2019.
Why the modular refineries pose a threat to Dangote Refinery
In the meantime, two of Nigeria’s newly-licensed modular
refineries have already commenced work, refining about 17,000 per day. Many
others are expected to operate in this capacity, with the least producing about
1,000 barrels on a daily basis.
As the Bloomberg analysis surmised, these small refineries’
collective output could potentially “surpass Dangote’s giant facility” by the
time they are all ready.
Meanwhile, Dangote Refinery is already well-positioned to
operate profitably. Moreover, the competition does not really matter. According
to Ibe Kachukwu:
“If we succeed in stopping the importation of refined
petroleum products, something I’m very committed to, we will be saving 30 to 40
percent of the foreign exchange in this country.” – Kachukwu
