NNPC starts negotiations with Dangote Group about buying a 20% stake in its Lekki refinery

STATE-owned oil conglomerate the Nigerian National Petroleum Corporation (NNPC) has expressed an interest in purchasing a 20% stake in the new Dangote Refinery that has just been commissioned in Lagos State.

Due to be a  650,000 barrels per day integrated refinery and petrochemical project, the Dangote refinery in the Lekki suburb of Lagos costs $12bn to construct and will meet all of Nigeria's domestic petroleum needs. When fully functional, the Dangote refinery is expected to produce 10.4m tonnes of gasoline, 4.6m tonnes of diesel, 4m tonnes of jet fuel, 690,000 tonnes of polypropylene, 240,000 tonnes of propane, 32,000 tonnes of sulphur and 500,000 tonnes of carbon black feed a year.

In contrast, the NNPC has three refineries in Kaduna, Port Harcourt and Warri but none of them are currently working, forcing Nigeria to import petrol. Although the federal government is looking to repair its three comatose refineries, the NNPC said discussions were already ongoing with the Dangote Group for the acquisition of the stake.

Mustapha Yakubu, the NNPC's chief operating officer refining and petrochemicals, said that the collaboration will further ensure undisrupted product supply to Nigerians when the deal materialises. He added that one of the NNPC's units, the Greenfield Refining Projects Division (GRPD) was handling the negotiations.

Mr Yakubu said: “We have what we call the green field refinery and the Greenfield Refining Projects Division of the NNPC. What we do, our strategy is to collaborate and seek strategic partnerships with private investors.

“At the moment, we have Dangote Refinery, which is the 650,000 capacity barrels per day plus a mini 80,000 tonnes per annum petrochemical plant. What are we doing there? I can tell you today that we are seeking to have a 20% minority stake in Dangote Refinery as part of our collaboration and you know that there’s a huge quantity of crude for that refinery.

“That’s 650,000 barrels, going into a single crude distillation unit. When that comes on board, it will also wet the nation for us.”

He added that the corporation is also interested in partnering with the African Refinery in Port Harcourt, as well as the CNCEC Chinese group, which is interested in building two refineries in Nigeria. It is also looking to acquire a stake in the proposed Waltersmith modular plant, in addition to collaborating with Azikel refineries on condensate production.

Mr Yakubu stated that notwithstanding the global push for renewables, Nigeria has a local, domestic and regional market for hydrocarbons. He added that Africa will continue to rely on fossil fuels at least in the next 20 years.