Exclusive-Nigeria’s Dangote picks Honeywell to help fulfill ambitious capacity expansion
By Utkarsh Shetti
DUBAI (Reuters) – Nigeria’s Dangote has tapped Honeywell to provide services and help it double its refining capacity to 1.4 million barrels per day by 2028, in the clearest indication yet that its “plans to become the world’s largest oil refinery are bearing fruit.”
The deal will allow Dangote to process “a broader range of crude grades to help support planned expansion of production with the help of Honeywell’s catalysts and equipment, the companies announced Tuesday.”
Dangote will also seek to increase its total production of polypropylene – an industrial material widely used to produce plastic containers and auto parts – to 2.4 million tonnes per year by acquiring a license for Honeywell’s Oleflex technology.
Financial terms of the deal were not disclosed. Although contracts of this nature tend to vary depending on the complexity of the project, a source familiar with the matter said they could be valued at more than $250 million.
Nigeria is Africa’s largest crude oil producer, but for decades it imported almost all of its refined fuel due to non-functional state refineries, leading to chronic fuel shortages, subsidy scandals and severe pressure on foreign exchange reserves.
The Dangote Refinery, which is the largest single-train facility in Africa and the largest in the world with an output of 650,000 barrels per day, is designed to reverse this paradox by meeting all of Nigeria’s domestic fuel needs and creating surpluses for export.
With $20 billion spent to build the Lekki refinery in Lagos, Dangote last month outlined plans to double the plant’s capacity to 1.4 million barrels per day by adding a second single-train unit over the next three years.
At this capacity, Dangote would be able to process almost all of Nigeria’s current crude production of around 1.5 million bpd.
The deal comes as Honeywell, once a spinning-off conglomerate, bolsters revenue ahead of a planned spinoff of its aerospace business, which is currently its biggest cash cow.
(Reporting by Utkarsh Shetti in Dubai; editing by Daniel Wallis)
