Exclusive-Nigeria Dangote Conversations with Oil Filter Credit Traders

LAGOS / LONDON (Reuters) – Africa’s richest man, Aliko Dangote, is in talks with some of the world’s biggest oil traders to fund a mega refinery outside the Nigerian business center Lagos, according to sources familiar with the matter.

FILE PHOTO: Dangote Oil Refinery Under Construction in Ibeju Leki District, Lagos, Nigeria July 5, 2018 REUTERS / Akintunde Akinleye / File Photo

Completed at 650,000 barrels per day, it is the continent’s largest plant and will rehabilitate major oil and gas flows in the Atlantic basin.

Despite being Africa’s largest oil producer and exporter, the country has relied almost exclusively on oil imports after decades of weakening its refining capacity by 445,000 barrels per day.

Many former and current Nigerian officials, including President Muhammadu Buhari, have announced plans to renew them, but there is a lack of political will.

The Institute of Natural Resources Management, a non-profit policy research institute, has previously identified refineries as the main focus of oil corruption and waste in the country.

In the wake of the COVID-19 epidemic and the economic consequences of construction costs, Dangote needs a cash injection.

The Nigerian Petroleum Corporation (NPC) has agreed to buy a 20% stake in the refinery for about $ 2.8 billion, but Dangote wants foreign cash. NCC head Mele Kiyari said a process is underway with Afrexim Bank to raise $ 1 billion to cover part of the acquisition.

A month ago, the billionaire held talks with the world’s two largest oil traders – Trafigura and Vitol.

Trafigura and Vitol declined to comment. A Dangote spokesman did not respond to a number of questions.

Two well-informed sources say the $ 500 million fundraising option is being explored.

The details of the loan from a business are not complete but the trader may have a long-term contract to supply raw materials and pay for the shipment of net goods.

The Dangote refinery, previously valued at $ 12-14 billion, has been delayed for several years to $ 19 billion. According to two sources familiar with the project, there was an outbreak among workers at the station and delays in obtaining materials due to the CVD-19 epidemic.

Many industrial sources do not expect any production before the second half of next year.

Swiss merchants such as Vitol have been making money in Nigeria’s short-lived petrol for years by offering mega bids to Nigerian companies and as part of a decade-long oil swap deal.

The seizure of Dangote oil puts the trader in a quandary of new oil flows. Nigeria’s new draft oil experts, approved last month after 20 years of political turmoil, have added licensing requirements that Dangote fears will give them an effective monopoly.

Under the new rules, the regulator will give priority to importing filters and volumes will be based on production capacity or market share.

While Nigeria is theoretically open to international trade, its partnership with Dangote will be the only way to secure infrastructure in Africa’s largest economy.

Written by Libby George, Julia Payne in London and Dmitry Zdandanikov in London, by Julia Payne; Edited by David Evans

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