Exclusive-Nigeria’s Dangote picks Honeywell to help fulfill ambitious capacity expansion
By Utkarsh Shetti
DUBAI (Reuters) -Nigeria’s Dangote has asked Honeywell to provide services and help it double its refining capacity to 1.4 million barrels per day by 2028; This is the clearest indication that the company’s plans to become the world’s largest oil refiner are coming to fruition.
The deal will allow Dangote to process a wider range of crude grades to support a planned expansion in production with the help of Honeywell’s catalysts and equipment, the companies said on Tuesday.
Dangote also aims to increase total production of polypropylene, an industrial material widely used to produce plastic containers and car parts, to 2.4 million metric tons per year by licensing Honeywell’s Oleflex technology.
Financial terms of the deal were not disclosed. While such contracts tend to vary depending on the complexity of the project, a source familiar with the situation said the project could be worth more than $250 million.
Although Nigeria is Africa’s largest crude oil producer, for decades it has imported almost all of its refined fuel due to dysfunctional state-owned refineries, leading to chronic fuel shortages, subsidy scandals and heavy pressure on foreign exchange reserves.
The Dangote refinery, Africa’s largest and the world’s largest single-train facility at 650,000 barrels per day, is designed to reverse this paradox by meeting all of Nigeria’s domestic fuel needs and creating an export surplus.
Dangote, which spent $20 billion last month to build the refinery in Lekki, Lagos, plans to double the plant capacity to 1.4 million barrels per day by adding a second single-train unit over the next three years.
At this capacity, Dangote will be able to process almost all of Nigeria’s current crude production of around 1.5 million barrels.
The deal comes as Honeywell, a conglomerate that was once in the process of splitting itself, shores up revenues ahead of a planned spin-off of its aviation business, now its biggest cash cow.
(Reporting by Utkarsh Shetti in Dubai; Editing by Daniel Wallis)
