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FG urges Dangote to complete its refinery before Dec 2019



The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has urged the Dangote Group to expedite work on its crude oil refinery to enable it to come on stream before the end of 2019.



Kachikwu stated this on Monday in Lagos during his visit to the site of the Dangote refinery.



Earlier, the President/Chief Executive, Dangote Group, Aliko Dangote, had said the refinery would have the capacity to refine 650,000 barrels of crude oil per day.



“We are currently building the world’s largest single line refinery and petrochemical complex, and the world’s second largest urea fertiliser plant,” he told the minister.



He said the company would also be building the largest sub-sea pipeline infrastructure anywhere in the world, with a length of 1,100 kilometres, to handle three billion standard cubic feet of gas per day.



Dangote said the gas from the pipeline would augment domestic gas supply, adding that an estimated 12,000 megawatts of power could be added to the grid from the gas system.



“We will be adding value to our economy as all these projects will be creating about 4,000 direct and 145,000 indirect jobs. We will also save over $7.5bn for Nigeria annually through import substitution,” he noted.



Kachikwu, who commended Dangote for embarking on the project, said, “The challenge I give you as I leave here today will be one of time. I see your timing in terms of December 2019.



“But I am sure you will understand if I tell you that the refinery component should come earlier. I have made very frank commitment to Nigerians that I must exit importation of petroleum products by 2019, and I am going to keep to it. Please, continue to push the envelope and see how we can do this.”



The minister urged Dangote to tell his engineers to go back to the drawing board and try to make the refinery come on stream earlier than the end of 2019.



“Where do we come in as government? I think the first thing is that we must look seriously at whatever incentives this business needs. You cannot be investing $14bn in a country without sufficient incentives to drive the business,” he stated.



Earlier at the Nigeria Annual International Conference and Exhibition organised by the Society of Petroleum Engineers in Lagos, Kachikwu said the country would have to halt oil production if the cost of producing the commodity remained stubbornly high.



He said the country was being left behind by its peers that had dramatically reduced their cost of production.



“When you look at the cost of production in Nigeria, it remains blatantly high. Our cost per barrel today is about $27 per barrel for JV (joint venture) fields. In Saudi Arabia, it is about $9. So, we are way apart in terms of cost that anything that happens will hit us very hard,” Kachikwu said.



He explained that countries in the Arab world had cut costs drastically, describing them as the lowest-cost producers in the world.



“Even though we have been singing over the last two years that we need to drive cost down, the current figure that I still have showing me the numbers of last year has not shown me a major reduction in the cost of production,” the minister said.



He added that the government would compel a reduction in the cost, because “there is no way this country will produce oil at this sort of swelling prices that we see; there will be no margins left for this country.”



According to him, only oil companies that are able to drive down costs will have a footage in Nigeria.



Kachikwu stated, “For me, you rather leave the oil in the ground than produce at a cost that doesn’t make sense. So, cost is going to be a very high driver. So, that is certainly one area we are focusing on; we are working collaboratively with oil companies.



“But let’s make no mistake about it: If we cannot negotiate it down, we will compel it or we will stop the production; it does not make any sense.”

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