Some stakeholders in the Oil and Gas industry have said it would be a wise decision for Dangote Refinery to share it risks by allowing other investors to have equity in the project provided they don’t change his vision for the company .
They however stated that the company has not said it is ready to sell equities to anybody, yet.
Andy Olotu, former managing director of Schlumberger said selling some equity is a business decision that Dangote has to make. “Does he want to sell 20 percent of his company,? if yes, to who?. If he says ok, that he wants to sell 20 percent to be acquired by crude oil suppliers that would be ok. It then becomes like a joint venture.”
Another industry stakeholder who is very Knowledgeable about the operations of refineries but does not want his name mentioned said the decision to sell some equity would amount to risk sharing. This he said would be good for the company.
Dangote Industries Ltd had told Reuters that three oil firms from Western and Middle Eastern countries, including the Nigerian National Petroleum Corporation (NNPC) have indicated interest in acquiring a stake in Dangote Refinery, Africa’s largest oil refinery.
It said that the firms, which are involved in trading and crude oil production, are looking to secure crude supply agreements, a similar objective to that pursued by the state oil giant, the NNPC.
Edwin Devakumar, Group Executive Director of Dangote Industries Ltd,disclosed this to Reuters, in a telephone chat on Friday, May 28, 2021.
Edwin said, “They are seeking to have 20% minority stake in Dangote refinery as part of collaboration … so that they can sell their crude.’’
He said Dangote refinery was not looking for equity, and that the company wanted to be able to secure crude from the market.
Edwin said the refinery was scheduled for mechanical completion this year, with commissioning by January 2022.
Due to the moribund state of the four government-owned refineries, Nigeria, Africa’s biggest crude oil exporter, imports virtually all of its fuel. This has probably led to the interest shown by the NNPC in the 650,000 barrel per day (BPD) Dangote refinery.
The disclosure was made by NNPC Chief Operating Officer, Refining and Petrochemicals, Mustapha Yakubu, while speaking at the end of the two-day Nigeria Oil and Gas Opportunity Fair (NOGOF), 2021, stating that one of its divisions, the Greenfield Refining Projects Division (GRPD), was handling the negotiations with Dangote Refinery.
The company has held talks with firms including Vitol and Trafigura over the supply of crude and lifting of petroleum products for sale abroad.
Nigeria lost its biggest customer, the United States after it started producing shale oil. The U.S. is now pushing into some of Nigeria’s most valued markets, Edwin said.
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