DANGOTE

PETROCHEMICAL
REFINERY, LEKKI FREE
ZONE, LAGOS-NIGERIA
A PAPER PRESENTED AT THE GENERAL MEETING OF THE NIGERIAN
SOCIETY OF ENGINEER (NSE), ABUJA BRANCH

BY
ENGR. JIBRIL, HASSAN MNSE, MNICE, MNES, MNISAFETYE
© AUGUST, 2020
 PRESENTATION OUTLINE

üProject Overview
üProject Initiation
üProject Delivery Model
üKey Lessons Learned
üConclusion
 PROJECT OVERVIEW
• Dangote petrochemical refinery complex was developed on 2,635 hectare
site on the Lekki Free Zone near Lekki Lagos, along the coast of Atlantic
Ocean with capacity to refine 650,000 barrels per day (bpd).
• The processing facilities for Dangote refinery comprises of crude oil distillation
unit (CDU) and associated facilities, mild hydrocracking (MHC) unit, residual
fluid catalyst cracking (RFCC) unit, naphtha hydrotreater and gasoline
hydrodesulfurisation (HDS) unit as well as alkylation units.
• The refinery complex also house sulphur recovery and hydrogen generation
facilities and polypropylene unit. Comprising two stream methane reformer
(SMR) unit, the hydrogen generation facility will generate 200,000Nm3/h of
hydrogen and stream to produce sulphur-free fuels.
• Other processing units include sulphur acid regeneration (SAR) unit, sulphur
recovery unit, fluid catalytic cracking unit. It produce up to 50 million litres of
gasoline and 15 million litres of diesel a day.
 PROJECT OVERVIEW
• Dangote oil refinery process a variety of light and medium grades of crude to
produce Euro-V quality clean fuels including gasoline and diesel as well as jet
and polypropylene, propane, sulphur and carbon black feed.
• A jetty was built near the refinery project site to receive heavy equipment for
the refinery construction.
• The infrastructure facilities for the refinery complex includes a pipeline system,
access road, tank storage facilities, and crude and product-handling facilities. A
marine terminal, including a breakwater, jetty and harbour. Other includes
administrative building, guardhouses, fire station and pump station.
• The refinery complex will also house a fertilizer plant, which will utilise the
refinery by-products as raw materials.
• It’s the Africa’s biggest oil refinery and the world biggest single-train facility. It’s
integrated refinery and petrochemical complex.
 PROJECT INITIATION
• Nigeria is the second biggest oil-rich country in Africa after Libya with over 40
billion barrels of proven reserves.
• The West African country is however, dependent on imported refined fuels
products due to lack of domestic refining capacity. The Nigeria refining capacity
is 446,000 barrels per day (bpd) from five refineries namely: Port Harcourt I
established in 1965 with capacity of 60,000 bpd, Warri in 1978 with 125,000
bpd capacity, Kaduna in 1980 with 110,000 bpd capacity, Port Harcourt II in
1989 with 150,000 bpd capacity and Niger Delta Petroleum Resources (NDPR)
refinery in 2009 with 1,000 barrels per day capacity.
• None of the refinery is working at full capacity due to ageing of facilities that
require periodic turn around maintenance. The refining capacity is insufficient for
the domestic usage in the country which necessitates Dangote refinery.
• The Dangote refinery will increase Nigeria’s refining capacity two-fold and help
meet the increasing domestic fuel demand, while generating foreign exchange
through exports.
 PROJECT INITIATION
• The geographical location of the refinery is ideal for easy transshipment of
refined petroleum products to the international markets.
• Dangote refinery and petrochemical limited was initiated in 2013 when He
secured the loans $3.5 Billion credit financing and Dangote Group would invest
$3.0 Billion at that time the project investment is estimated at $10.0 Billion which
is subsequently planned between 2015 to 2018.
• Engineers India was awarded the engineering construction and procurement
contract for the refinery. After a change in location to Lekki, construction of the
refinery did not begin until late 2016 with excavation and infrastructure
preparation and planned for completion.
• By July, 2017 major structural construction began and Dangote estimated that
the refinery would be mechanical complete in late 2019 and commissioned in
early 2020.
 PROJECT DELIVERY MODEL
• Engineers India was contracted to provide Engineering Procurement and
Construction (EPC) for the refinery project.
• Honeywell UOP was contracted to supply catalyst regeneration and dryer
regeneration control system, column trays, heat exchanger tubes, a modular CCR
unit, and catalyst coolers among other equipments.
• C & I Leasing is responsible for providing transportation and installation services
for mooring systems and subsea pipelines of the refinery.
• Hang Xiamen Steel Structure Company was awarded a $112 million contract to
supply steel structure for the refinery.
• Jan De Nul Group was responsible for carrying out land reclamation works.
MAN Diesel &Turbo is supplying two compressor trains, while Air Liquide
Engineering & Construction is supplying the SMR units.
• Other supplying involved in the project includes Fabtech (18 columns), Schneider
Electric (process automation systems), WABAG (raw water treatment plant).
 PROJECT DELIVERY MODEL
• SOFEC (Catenary Anchor Leg Mooring buoys) and Boldrocchi delivered eight
diverter damper systems for the six GE gas turbines of the Dangote Refinery
under contract signed in 2016.
• The project initial cost is up to $15.0 Billion in total, with $10.0 Billion invested
in the refinery, $2.50 Billion in the fertiliser factory and $2.50 Billion in
pipelines infrastructure.
• Following dwindling value of Nigerian currency due to devaluation and its
subsequent impact on exchange rate coupe with projects delay saw the
integrated refinery and petrochemical complex reviewed from initial cost of
$15.0 Billion to $18.0 Billion with expected completion date of late 2020.
• Dangote oil refinery was funded with $3.0 Billion equity and $6.0 Billion loan
capital and Dangote Group $3.50 Billion. A consortium of local and
international banks led by the Standard Chartered Bank provided a $3.5 loan
facility. The United States Trade and Development Agency offered a $0.997
Million training grant to develop human resources for operating the refinery.
 KEY LESSONS LEARNED
• Majority of engineering project witnessed variation from the actual initial
projected cost estimates due to a number of factors ranging from inability to
execute initial plans as a result technical and funding challenges.
• The longer the project last beyond the initial completion date, the possibility of
expending far above the initial projected cost.
• Inconsistent budgetary allocations for major engineering project greatly affected
the overall benefits of the entire project in all ramifications.
• Major engineering projects encountered a key number of technical eventualities
from review of original design to price variation of construction materials which
significantly affected timely completion.
• Nigeria, Africa’s most populous nation, imports virtually all its fuel due to sclerotic
and under-utilised refineries, and even the state oil company is looking to the
650,000 barrels per day (bpd) Dangote refinery to help address the issues.
 KEY LESSONS LEARNED
• Price caps force the Nigeria National Petroleum Corporation (NNPC) to import
nearly all its gasoline at a significant cost and periodic shortages are common.
• Africa’s large oil refinery will not be finished until the end of 2020 due to
problems importing steels and other equipment which is building the facility in
the Nigerian commercial hub of Lagos.
• Despite delayed and technical challenges encountered, as well as price variation
experienced. The oil refinery is expects fuel production within two months of
completion which could transform Africa’s biggest crude producer from fuel
importer into a net exporter, upgrading global trade patterns.
• It will also product of 0.69 million tonnes of polypropylene, 0.24 million tonnes
of propane, 32,000 tonnes of sulphur and 0.5 million tonnes of carbon black
feed.
• Dangote refinery will have an annual refining capacity of 10.4 million tonnes of
gasoline, in addition to 4.6 million tonnes of diesel and 4.0 million tonnes of jet
fuel.
 CONCLUSION
• Dangote refinery and petrochemical project is a mega intervention on Nigeria’s
downstream petroleum sector. It will have a huge impact on Nigerian economy
because of saving a lot of foreign exchange in the tunes of $26.0 Billion for
the country.
• It’s much more expensive to import from abroad due to freight cost. The
differentials arrived because imported fuel was subjected to global crude oil
prices as well as other costs, including transportation and bank interest charges
on loans that importers with privileged licenses to bring in fuel.
• The project is the first of its kinds that would make Nigeria exporter of
petroleum products.
• The Dangote refinery will save Nigeria $16.0 Billion in forex revenues and
$10.0 Billion worth of domestic supplies fo petroleum products.
 CONCLUSION

THANK YOU FOR

LISTENING
 REFERENCES
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ØDangote Refinery, WIKIPEDIA available at

https://en.m.wikipedia.org/wiki/Dangote_Refinery [Accessed 17th August, 2020]