How Dangote Refinery will solve Nigeria’s FX problem - S&P Global

• S&P Global stated that the Dangote Oil Refinery and Petrochemicals company can solve Nigeria’s FX problem
• According to S&P, the 650,000 barrels a day refinery would serve as a boost to Nigeria's growing economy
• The analytics company predicted that Nigeria would become a net exporter of petroleum products as a result of the refinery

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

Nigeria's foreign exchange (forex) problem and the significant pressure it puts on the local Naira currency can be resolved by the Dangote Oil Refinery and Petrochemicals company, S&P Global, an international financial analytics company has said.

S&P stated that Nigeria's oil industry would benefit from the world's largest single-train refinery complex. Photo Credit: Dangote Refinery
Source: Getty Images

As part of its evaluation of Nigeria's sovereign credit ratings, S&P Global, which has its headquarters in Manhattan, New York City, revealed this information while on site at the Dangote Refinery in Ibeju-Lekki, Lagos.

According to S&P, Nigeria's oil industry would benefit from the world's largest single-train refinery complex, but more significantly, Nigeria's expanding economy would also benefit.

Nigeria to become net exporter

The delegation was led to Lagos by Ravi Bhatia, director and lead analyst at S&P Global Ratings for sovereign and international public finance ratings.

Bhatia predicted that the Dangote refinery will turn Nigeria into a net exporter of petroleum products.

He added that this shift will increase revenue production and lessen the strain currently placed on the nation's foreign exchange reserves.

“It is a very impressive facility, able to process 650,000 barrels a day, when in full capacity. It is the largest single-train refinery complex in the world. It came out quite quickly. Nigeria is a big exporter of crude but has issues with importing refined fuels. “So, there is a gap in the market where crude can be refined in Nigeria, save money that way, and potentially save some foreign exchange. This will be positive for the economy in the medium term. It looks positive from our assessment,” Bhatia said after an over four-hour tour of the facility."

Dangote refinery to begin producing PMS

Devakumar Edwin, vice president of Oil and Gas at Dangote Industries Limited (DIL), who guided the team through the facility, also reaffirmed in an interview with the media that the company hopes to spark a positive cycle of industrial development, job creation, and economic prosperity by using Africa's plentiful crude oil resources to produce refined products locally.

Additionally, he disclosed that the company will begin producing premium motor spirit (PMS) this month, July, as previously stated.

Edwin stated that the $20 billion facility can supply all of Nigeria's needs for aviation fuel, kerosene, diesel, and gasoline while also producing goods of a high caliber that satisfy international standards. Any excess fuel could be exported.

The S&P team applauded Dangote Industries Limited President Aliko Dangote for incorporating cutting-edge technologies and quality control procedures, such as a cutting-edge Central Control Unit that guarantees seamless automation of processes.

Currently operating at 350,000 barrels per day capacity, Edwin said the refinery is slated to scale up to at least 500,000 barrels per day capacity by July/August, commencing the refining of petrol and ultra-low sulphur diesel.

He mentioned that the refinery complies with Euro V requirements and is built to process a variety of crudes, including light oil from the United States and various African and Middle Eastern countries. Furthermore, it is engineered to meet the emission criteria set forth by the US EPA, the European Union (EU), the Department of Petroleum Resources (DPR), the African Refiners and Distribution Association (ARDA), and other regulatory bodies.

He said.

“The refinery can produce the best quality products in the world, Euro V grade. It is one of the energy-efficient refineries and it is highly environmentally friendly. It is sophisticated with a high level of automation. The largest single train refinery in the world is 100 per cent designed, engineered, and constructed by a Nigerian company as EPC contractor.”

NNPC declares state of emergency

Legit.ng reported that the Nigerian National Petroleum Company Limited (NNPC Ltd) has declared a state of emergency on crude oil production.

Speaking at the ongoing 2024 Nigeria Oil and Gas (NOG) Energy Week in Abuja on Tuesday, June 2, NNPC Ltd's group chief executive officer, Mele Kyari, declared a decisive move to address forces and challenges hindering crude oil production in the country.

According to the NNPC Limited boss, Nigeria can conveniently produce two million barrels of crude oil daily without deploying new rigs.

Source: Legit.ng