Dangote Refinery: Location, Capacity & Cost in 2021
In this post, I will enlighten you on the crude oil refinery type with a specific focus on Dangote refinery in Nigeria. But first, let’s give you a general overview of oil refineries, types, their functions and their uses.
Refinery comprises of a group of chemical engineering unit processes and unit operations that refining selected materials and transforming raw material like crude oil, natural gas into valuable and usable products.
There are six (6) major types of refineries namely:
- Crude oil refinery which breaks down crude oil into its component parts including gasoline/petrol/premium motor spirit (PMS), diesel oil, liquefied petroleum gases (LPG), Kerosene etc.
- Food oil refinery simply converts cooking oil into an end product that is uniform in taste, smell and appearance.
- In a sugar refinery, sugar cane and beets juice are been transformed into crystallized sugar and sugar syrups.
- A salt refinery refines common salt (NaCl) by cleaning, which results from evaporation of sea water, followed by washing and re-crystallization.
- Metal refineries refines metals such as copper, gold, lead, nickel, silver, uranium, zinc and magnesium.
- Iron refining is a process of refining pig iron (typically grey cast iron to white cast iron), before fining, which converts pig iron into steel or bar iron.
Oil Refinery Working Principle
In an oil or petroleum refinery, crude oil is transformed and broken down into more useful end products such as petrol (PMS or Premium Motor Spirit), naphtha, diesel fuel, asphalt base, heating oil, kerosene, aviation fuel etc.
They are simply an industrial complexes with extensive piping systems, transporting streams of fluids between large chemical processing units, such as distillation columns.
It consists of numerous processing units and auxiliary facilities including utility units and storage tanks. Each existing refinery has its own characteristic arrangement and combination of refining processes mostly determined by its location, desired end products and economic considerations.
The refining capacity of some petroleum refineries are as much as 800,000 to 900,000 barrels (127,000 to 143,000 cubic meters) of crude oil every day.
According to the data from the world Oil and Gas Journal, a total of 636 refineries were operated on the 31 December 2014 for a Cumulative production capacity of 87.75 million barrels (13,951,000 m3).
The largest oil refinery right now is Jamnagar oil refinery, and it has been since 25 December 2008. It has a crude processing capacity of 1.24 million barrels (197,000 m3). The refinery is located in Gujarat, India, is owned by Reliance Industries.
Nigeria is Africa’s largest crude producer and is home to the second largest oil reserve in Africa estimated at 37 billion barrels, but as bad it could sound, lacks the production capacity to meet the energy demands of Nigerians.
This made Nigeria to resort to sending the produced crude overseas for refining as the local refineries available in Nigeria such as Port Harcourt, Warri and Kaduna refineries are unable to meet the energy demands of the Nigerian populace.
Hence, the need for this refinery, which is designed to enhance the production of crude products, and will produce enough to enable the surplus of that fuel for export. It will also be able to send a large volume of diesel and aviation fuel to foreign countries around the world.
It is an integrated refinery and petrochemical project under construction in the Lekki Free Zone near Lagos, Nigeria and has a potential refining capacity of 650,000 barrels per day.
It is expected to be the Africa’s biggest oil refinery and the world’s biggest single-train facility, when it becomes operational in 2021. The refinery would also be one of the biggest refineries in the world upon completion in terms of refining capacity.
Dangote Oil Refinery, a company which is a subsidiary of the Nigeria-based Dangote Group, is executing the project with an estimated investment of $12bn. A variety of light and medium grades of crude will be processed from the oil refinery to produce Euro-V quality clean fuels such as gasoline and diesel, aviation fuel etc.
The refinery complex is being developed along the coast of Atlantic Ocean on a 2,635hectares site on the Lekki Free Zone in close proximity to the Lekki Lagoon.
The geographical location of the refinery is ideal for easy transportation of refined petroleum products to other foreign countries. A jetty has already been constructed close to the site of the refinery to receive heavy equipment for its construction.
Dangote Petroleum Refinery is investigating new technology in its decisions for the greatest and best gear throughout the entire existence of worldwide crude refining, similarly as the group’s craving for the best refinery machineries was exhibited as of late with the importation of the world’s largest Crude Oil Distillation Column, extraordinarily developed for the refinery.
Because of its size, while loading the gear on the vessel from China, it originally was transported from the fabrication unit on a barge to a waterway port, where an exceptional RoRo vessel was contracted.
In 2019, the organization introduced the greatest Residual Fluid Catalytic Cracker (RFCC) ever known in the worldwide refining segment; a verification of its longing to guarantee that Nigeria turns into a petroleum refining center point in Africa.
Structured so that no cost is saved in executing the most recent processing, analytical, automation, and environmental advancements at the new single-stream office, the refinery is additionally intended to suit different grades of local and foreign crude (counting shale oil) and convert these into gasoline, diesel, lamp oil, and aviation fuels that meet Euro V emissions specifications, in addition to polypropylene.
The world’s largest single Crude Distillation Column gear for processing crude oil into fuels at long last arrived at the project site in October, 2019. The refinery will be prepared for commissioning toward the start of 2021, with full capacity achieved before the finish of the first half of the year as per Devakumar Edwin, the group executive director at Dangote Industries Ltd.
Engineers India was awarded the building, construction and acquisition contract for the refinery.
UOP was contracted to supply, column trays, heat exchanger tubes, a modular CCR unit, and catalyst coolers, catalyst regeneration and dryer regeneration control systems among other hardware.
C&I Leasing is put in charge of providing transportation and installation services for the mooring systems and subsea pipelines of the refinery.
The Hang Xiao Steel Structure Company was awarded $112m contract for the supply of steel structure for the refinery. The Jan De Nul Group was liable for doing land reclamation works.
MAN Diesel and Turbo is providing two compressor trains, while Air Liquide Engineering and Construction is providing the SMR units.
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Different providers involved in this project includes incorporate Fabtech (18 columns), Schneider Electric (process automation systems), SOFEC (Catenary Anchor Leg Mooring buoys) and WABAG (a raw water treatment plant).
Boldrocchi delivered eight diverter damper systems for six (6) GE gas turbines needed for the refinery, under a contract signed in 2016.
While the entirety of the significant contractors referenced above are on the whole outsiders, the refinery strive to construct local content in the project. The local content development initiative involves organizations granting contracts to Nigerian contractors with the point of building local capacity. What’s more, it didn’t miss the mark at the moment.
As indicated by the declaration made regarding the refinery, a sum of $368 million contract has been awarded to 120 local contractors since the beginning of the project.
According to the company stated, it’s contributing its quantity to the Nigeria content development initiative.
Units & Facilities of the Refinery
The processing facilities of the refinery incorporate a crude distillation unit (CDU) and related facilities, a mellow hydrocracking (MHC) unit, a residual fluid catalytic cracking (RFCC) unit, a naphtha hydrotreater, and a gasoline hydrodesulfurisation (HDS) unit just as alkylation units.
The refinery complex will likewise house sulfur recovery and hydrogen age facilities and a polypropylene unit. Including two steam methane reformer (SMR) units, the hydrogen age facility will create 200,000Nm³/h of hydrogen.
The other processing units at the refinery incorporate the STRATCO® alkylation unit, the MECS® sulphuric acid regeneration (SAR) unit, the MECS® DynaWave® sulfur recovery unit, and the BELCO® EDV® fluid catalytic cracking unit.
The infrastructure facilities for the refinery complex incorporate a pipeline system, get to streets, tank storerooms, and crude and product-handling facilities. A marine terminal, including a breakwater, jetty and harbor, has likewise been developed as a major aspect of the project.
Different facilities developed to support the project incorporate an administrative structure, guardhouses, fire station, and pump stations. The refinery complex will likewise house a fertilizer plant, which will use the refinery by-products as raw materials.
Sources of Capital for Dangote Oil Refinery
The Dangote oil refinery is being subsidized with $3bn equity and $6bn loan capital. A consortium of local and international banks drove by the Standard Chartered Bank provided a $3.3bn loan facility.
The United States Trade and Development Agency offered a 251.3bn Naira (0.997million US Dollars) training grant to develop human resources for working the refinery.
The Oil Refinery Products
The facility will have an annual refining capacity of 10.4 million tons of gasoline, in addition to 4.6 million tons of diesel and 4 million tons of jet fuel. It will also produce 0.69 million tons of polypropylene, 0.24 million tons of propane, 32,000 tons of Sulphur and 0.5 million tons of carbon black feed.
What the Refinery Brings to Nigeria Upon Completion
- Boost the Economy
- Create Good Jobs
- Increases Foreign Exchange Reserves
1.) Boosting Nigeria’s economy
The operation of the refinery in Nigeria will surely be a welcomed boost to Nigeria’s economy. Chief reason for this sis the fact that there will be no need for Nigeria to export fuel from other nations which results in excessive costs.
President, Dangote Group, Aliko Dangote also disclosed that the Petroleum Refinery will create $11 billion per annum market for Nigerian crude. Upon completion, it will meet 100% daily Nigerian consumption of all refined products and would also have the surplus for export.
He continues, The new refinery will double Nigeria’s refining capacity and help in meeting the increasing demand for fuels, while providing cost savings.
2.) Creation of jobs
As stated earlier in this article, the Dangote oil refinery project has already created a lot of job opportunities for unemployed Nigerian citizens and is expected to provide more opportunities upon completion and commission of the oil refinery. The project is expected to provide at least 9000 permanent jobs for Nigerians.
3.) Increased Foreign Exchange Reserves
This refinery is expected to save Nigeria about $10 billion in foreign exchange when completed.
By the time the Dangote refinery is fully operational, it has a production capacity that can cater for the energy demands of Nigerians, which thereby allow for the exportation of the excess products from the refinery to countries all over the world.
Dangote plans to export its diesel to Europe and gasoline to Latin America, Western and Central African markets according to Devakumar Edwin, a group executive director at Dangote Industries Ltd.
The mega Dangote oil processing plant will fundamentally change the downstream sector of Nigeria and empower crucial import substitution. The importance and potential transformational nature of such an industrial development for Nigeria, West Africa and sub-Saharan Africa everywhere can’t be downplayed.
For quite a long time, in spite of the fact that Nigeria is the biggest producer of crude oil in Africa, it has consistently been subject to imports of fuel and refined oil products.
The processing plant, when finished, will have an enormous effect in supplanting those imports and thusly make a huge improvement in the nation’s trade balance, and a super lift to jobs, industrial development and the nation’s GDP.