A $9-billion oil refinery, expected to be the largest and most complex refinery in Africa, is to come on stream in Lagos, Nigeria, by the third quarter of 2017.

The oil refinery is expected to unlock value for Nigeria and help slash reliance on international markets on which Africa’s most oil-rich country depends, African conglomerate Dangote Group senior executive Mansur Ahmed told the African Refiners Conference in Cape Town.

“Over the next five years we project we will be able to produce 500 000 bbl/d of oil,” Ahmed told Engineering News at the conference.

Africa’s wealthiest man and head of Dangote Group, Aliko Dangote, was spearheading the development at the Lekki deep-water port in Lagos. The oil refinery, which would be flexible on crude and other products, would be designed for maximum gasoline and high propane yield.

The development would conform to Euro V product specifications, while procurement will be subject to international standards, Ahmed explained.

In a speech on Dangote’s behalf, he said there were clear opportunities for refineries in Africa, where progress in the field had been extremely slow.

“There is a current demand of over 500 bbl/d in Nigeria and surplus supply will not be a problem. We have designed our refinery to refine crude sources from countries outside of Nigeria as well.”

Ahmed pointed out that increasing economic growth in Africa had prompted the development. 

“Africa is the fastest growing area in the world. Over the next ten years or so, huge investments will have to be made in both infrastructure and in industry. And with that comes massive demand.”

Ahmed advised that the refinery was expected to unlock latent capacity. “Seventy per cent of refineries are owned by national oil corporations and have experienced years of under-investment.”

He said progress had been extremely slow since 2000, with the continent’s refinery capacity hovering at only 3% of the global total.

“Regrettably, the industry has failed to keep pace with Africa’s steady economic growth over the past decade, while State-owned oil fields were largely degraded owing to poor management.”

Reading Dangote’s address, Ahmed said State refineries had virtually collapsed, while Africa had to import almost 90% of the refined products to cope with its increasing demand for products and the continent’s needs. 

He added that investors tended to invest rather in storage facilities and distribution networks, but there was great opportunity for private investors to expand and modernise refineries.

Responding to questions, Ahmed forecast that some old European plants would shut down.

“Being so close to Europe, we are going to take that opportunity.”

Dangote Group had diversified interests in Africa, ranging from cement and manufacturing to oil and gas.

The Nigerian oil refinery was expected to surpass the largest refinery at present, which was in Algeria and produced about 300 000 bbl/d.