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Nigerian Dangote in talks with traders for oil refinery loan

October 14/2021

MOSCOW (MRC) -- Africa's richest man Aliko Dangote is in talks with some of the world's biggest oil traders to help finance his mega refinery project outside of Nigeria's commercial centre Lagos, sources with knowledge of the matter said, said Hydrocarbonprocessing.

The 650,000 barrel-per-day refinery, once complete, will be the continent's largest plant and redraw major trade flows of crude and fuel in the Atlantic basin. Despite being Africa's biggest oil producer and exporter, the country depends almost entirely on fuel imports after allowing its significant refining capacity, 445,000 barrels-per-day, to become dilapidated over several decades.

Many past and current Nigerian officials, including President Muhammadu Buhari, have announced plans to refurbish them but political will has been lacking. The Natural Resources Governance Institute, a non-profit policy think tank, has previously pointed to the moribund refineries as a key focus of oil corruption and waste in the country.

Hit by economic consequences of the COVID-19 pandemic and soaring construction costs, Dangote needs a cash injection.

Nigeria's state oil firm NNPC has to agreed to buy a 20% stake in the refinery for about USD2.8 billion but Dangote is looking for outside cash. read more NNPC's head Mele Kyari said a process was on-going to raise USD1 billion with Afreximbank to fund part of its stake purchase.

The billionaire has held talks as recently as a month ago with executives from the world's top two oil traders - Trafigura and Vitol. Trafigura and Vitol declined to comment. A spokesperson for the Dangote Group did not respond to multiple requests for comment.

Two sources with direct knowledge said the option of raising another USD500 million from a trade house or consortium was being actively explored. The details of a potential loan from a trading firm have not been finalised but the trader could receive a long-term contract to supply crude and receive cargoes of refined products as repayment.

The refinery has been delayed by several years and the cost has ballooned to $19 billion from Dangote's earlier estimates of USD12-14 billion. Construction was also delayed due to COVID-19 outbreaks among workers at the site and delays getting materials, two sources with knowledge of the project said

Many industry sources do not expect any products before the second half of next year. Swiss traders like Vitol along with Nigerian firms, have cashed-in for years in gasoline-short Nigeria by supplying mega tenders and being part of lucrative crude-for-fuel swap deals for over a decade.

Getting a hold of Dangote's fuel will give the trader a stranglehold on a key set of new oil flows. Nigeria's new oil bill, approved last month after nearly 20 years of political wrangling, has added fuel-import licence requirements that experts fear will give Dangote an effective monopoly.

Under the new laws, the regulator will prioritize local refiners for import licences and volumes would be based on production capacity or market share. While Nigeria will remain open in theory to international trading houses, a partnership with Dangote would be the only way to guarantee a foothold in Africa's biggest economy.

As per MRC, in May this year, Four oil firms including Nigeria's state-oil company approached Dangote Industries to acquire a stake in Africa's largest oil refinery.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year.


mrcplast.ru
Author:Anna Larionova
Tags:petroleum products, crude oil, PP, PE, neftegaz, petrochemistry.
Category:General News
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