-By Yange Ikyaa
Untold story of the world’s largest refinery in the making, its business and employment opportunities for people and companies in Nigeria
The Dangote Oil Refinery Company is constructing an integrated refinery and petrochemical complex in the Lekki Free Trade Zone near Lagos, Nigeria that is slated to cost $14 billion, or N2.8 trillion, of which Dangote is contributing $7 billion in equity.
The multibillion dollar facility, which has its allocated land covering an area of approximately 2,635 hectares, is six times the size of Victoria Island and has now become the largest single project ongoing on Nigerian shores, actively employing many companies and people.
This refinery, which is estimated to cost $9 billion to complete, will produce Euro-V quality gasoline and diesel, as well as jet fuel and polypropylene.
Nigeria is estimated to hold approximately 37 billion barrels of proven oil reserves, which is the second biggest in Africa, but imports majority of its refined products due to lack of domestic refining capacity.
However, Dangote’s new refinery, when completed, will double Nigeria’s refining capacity and help in meeting the increasing demand for fuels, while providing cost savings, particularly forex.
It has been estimated that when this project comes on stream, it will enable Nigeria to save a minimum of $10 billion a year on imports. The plant also has an export value of $6 billion per annum, meaning that Dangote’s efforts will increase the amount of foreign exchange in Nigeria’s foreign reserves by at least 40 percent of current value on a yearly basis.
Situated Southeast of the Lekki Free Trade Zone in the Nigerian commercial capital of Lagos, it houses massive hi-tech projects, such as the largest single train petroleum refinery in the world, with the production capacity of 650,000 barrels per day; two of the world’s largest fertilizer trains, with the production capacity of three million tonnes per annum; as well as the largest sub-sea pipeline infrastructure in any country in the world, with the length of 1,100 kilometres to handle three billion standard cubic feet of gas per day.
Apart from the three gigantic industrial complexes described above, there is also a 400 megawatt power plant for the refinery alone, which has the capacity to meet the total electricity supply requirements of Ibadan Electricity Distribution Company (IBEDC), which is about 860,316 MWh, used in serving the energy supply needs of the five states of Oyo, Ogun, Osun, Ekiti and Kwara.
“We are buying 300 cranes to build up equipment installation capacity, since the current capacity in Nigeria is extremely poor,” said Yinka Akande, the Group General Manager (GGM) of Dangote Refinery.
According to him, “we built the world’s largest granite quarry to supply coarse, aggregate, stone column material, stone base, stone dust and material for break water,” all in a systematic effort to keep pace with work timelines and standards.
Valuechain findings about the current scope and progress of work within the Dangote Industries Free Trade Zone show that the engineering works are 100 percent complete, while procurement is 97 percent done.
An official document from Dangote Group seen by Valuechain further indicates that civil works, such as sea dredging and dynamic compaction are 100 percent complete, while the boundary wall and stone columns are 95 percent complete.
The foundation works are also in progress and in great speed towards completion, with piling 90 percent complete, and the substructure and super structure works 40 percent complete.
Progress report on the infrastructure within the Dangote industrial facility show that roads, drains, and culverts are 50 percent complete, while the Marile: RORO/LOLO Jetty is totally completed.
In the area of structural erection, there has been up to 16,982 metric tonnes of structural steel erected, just as the scope of work on the underground piping network shows that 103,733 inches Dia UG has been fabricated, with 163,296 inch meter installed.
Crude Oil Tanks
There is work in progress on the fabrication of seven tank pads and six other tank pads have already been completed, and erection commenced in three tanks out of the 16 projected to be installed.
Product Tanks
For the product tanks, there are a total of 54 tanks already completely fabricated and the erection or installation of 48 out of the 54 finished product tanks is currently in progress. Just one of those product tanks is able to hold 60 million litres of liquids or condensate.
Concrete Requirement
The concrete required for piling, which is 130,000 piles, for this project amounts to 700,000 cubic meters and the infrastructural works, covering roads, drains and culverts, will require 610,000 cubic meters of concrete.
Further details show that, with the thickness of 9 inches and 16 meters wide, the concrete required for the entire project will be enough to pave the entire federal roads in Lagos, which cover a total distance of about 720 kilometers.
For the RCC sub-structure, the quantity of concrete required is 600,000 cubic meters, while pavement in industrial plant areas will need 150,000 cubic meters of concrete, just as the RCC superstructure will take 100,000 cubic meters of concrete and buildings in plant and non-plant areas 90,000 cubic meters of concrete.
Valuechain learnt that concrete roads within the Dangote refinery alone will cover the length of 112 kilometers when fully completed, apart from refinery’s concrete drains of 200 kilometers and the ODC Road from the jetty to fertilizer plant and refinery, which is of the length of nine kilometers.
Piping
The piping items required for scope of work of the Dangote Refinery is 6,176,338 of AG Piping ID; 19,091,213 of AG Piping IM; 740,405 of UG Piping ID; and 2,578,400 of UG Piping IM.
This scope of work will be carried out across a network of 86 buildings, out of which there will be 22 SRRs/ control rooms, 19 substations, and 45 non-plant buildings.
Workforce
When work commences fully at this massive industrial complex, the manpower needs will stand at 60,000 people at peak periods, as well as 300 cranes, facilitating the movement of 2 million cargoes per day.
The sophistication of work tools being deployed here for work construction is unmatched by all standards across the building and construction space within Nigeria.
There is already a 1,500 tonne crane at the jetty within the Dangote Industry Free Trade Zone performing various tasks. Currently, the local manpower on site of construction work is above 10,000 people, yet with the potential for progressive addition to the number as construction and maintenance works proceed and keep expanding in scope.
Material Unit Requirements
The Sulphur Recovery Unit (SRU) in the complex alone will need a total of 2,810 units of equipment, including 1,055 pumps, 557 heat exchangers, 483 air coolers, 443 vessels, 153 tanks, 68 columns and 51 reactors.
Other requirements are one million tonnes or 22,300 truckloads of cement, 200 thousand tonnes of rebars, which are enough to build 20 thousand four bedroom duplexes, 140 thousand tonnes of steel plates and 110 thousand tonnes of structural steel.
Then, the LT and power cables needed for wiring works will cover the length of 6,800 kilometers, equivalent to travel distance from Lagos to Kano six different times.
The pipes needed for work here will reach the length of 2 thousand kilometers and will cover a distance of movement from Lagos to Maiduguri, while the HV and MV cables to be used will reach the length of 575 kilometers and could cover as much as the distance from Lagos to Lokoja.
This will create a huge opportunity for cable manufacturing, supply and installation companies in Nigeria, such as Coleman Wires and Cables.
Today, the value of Coleman Wires and Cables, a Nigerian cable manufacturing company, which is worth well in excess of N25 billion and still growing, according to data sourced by Valuechain from the company.
In 2009, the company had 120 staff and today it is employing about 400 people and still growing. It runs one shift with 400, with 90 per cent of its funds coming from commercial banks, especially working capital.
The company says it has the ability to employ over 8,500 people if running its factory fully, and if government and large corporations are patronizing local businesses such as theirs.
“The real sector can develop the Nigerian economy if the government decides to focus on those companies that can create employment and generate more jobs. For the real sector to expand and create more jobs, government needs to reduce cost of borrowing, as commercial borrowing cannot sustain manufacturing companies because it is very expensive,” said George Onafowokan, the CEO of Coleman Cables.
Today, Coleman is the pioneer for a lot of products not only in Nigeria but also in West Africa, especially staying ahead in meeting the local content needs of international oil and gas companies operating in Nigeria, including 100 percent FPSO topside cabling, and even producing part of the subsea wiring cables.
Coleman is the first and only producer in West Africa of insulated high voltage cable up to 33KV, and is also the pioneer producer of CAT 5 and CAT 6 network cable that are used for local area network production and telecommunications in West Africa.
The company is the first producer of TV/video cable which is used for TV antennae connections and cable satellite as well as other products. Those are the three major pioneer products it has in West Africa. In terms of DC flexible cable, Coleman is the biggest producer in West Africa and it does the biggest sizes.
Considering the high voltage cable, the company is the sixth country in the continent to produce this and in East Africa, Central Africa and West Africa, it is the pioneer of the large majority in this area. Prior to that, you could only get the Insulated High voltage cable in North Africa or South Africa.
Berthing Facility
Handling of cargoes at this facility, including Over Dimensional Cargoes (ODC), is seamless since it has the flexibility to handle RORO (Roll-On Roll-0ff) or LOLO (Lift-On Lift-Off), depending on the size and nature of cargo.
The Dangote Jetty is situated at a distance of 12.3 kilometers from the refinery, thereby reducing the travel time for the Self Propelled Modular Transporter (SPMT) that would move cargoes between the two facilities at the speed of five kilometers per hour.
Valuechain investigations confirmed from the Dangote Group that the proximity of the company’s refinery from its jetty at the Lekki Free Trade Zone will cut travel time to two days as compared to the 21 days it could take to travel from the same refinery to Apapa Jetty.
The situation of the jetty close to this petrochemical industrial facility was necessitated in order to forestall the problem of gridlock currently experienced at Apapa Jetty due to inordinate delays on account of its low load bearing capacity at existing quays.
A 2018 report by the Lagos Chamber of Commerce and Industry, in collaboration with the Nigerian Economic Summit Group, the Manufacturers Association of Nigeria, and other affiliate business entities, says that Nigeria loses “about N3.06 trillion (or $10 billion) on non-oil export and about N2.5 trillion corporate earnings across the spectrum of its economy on a yearly basis” as a result of the gridlock on access roads connecting the Apapa Port to the rest of the Nigerian economy.
There are about 27 tank farms situated there, apart from factories, bonded terminals, and service businesses, but the perennial gridlock frustrates importers and exporters in their quest to meet supply deadlines.
Static road jam extends from the Apapa Port to as far as Fadeyi, as trailers, tankers and other trucks, as well as cars and buses assume near permanent positions of the roads and bridges on the most important economic corridor in Nigeria.
Government’s decades of efforts to resolve this haulage crisis on this road have failed and the economic losses continue. This is the negative situation that is being mitigated by the Dangote Group by locating its petrochemical complex along the same corridor with its own jetty.
Since the commencement of construction work at the refinery, over 10,000 Nigerian personnel have been employed on site, but the extent of employment by the various contractors and sub-contractors on the expansive construction site presently stands at 7,500 people.
The current ratio of Nigerians to expatriates that are doing the various jobs is 93 percent Nigerians to 7 percent expatriates, and about 120 contractors are currently working on the site, even as many more are expected to join in the effort to meet a 2020 deadline of work completion and commissioning of the refinery to start production.
With a structured and strategic plan to train a total of 900 Nigerian engineers in engineering and design of the refinery, the fourth batch of engineers are currently undergoing training in India to make sure that the right set of skills and talents are made available to local personnel to handle the jobs and further entrench Nigerian content and participation, earn the pay, contribute to the local economy, and reduce the severity of capital flight associated with the development of such hi-tech projects in developing countries, including Nigeria.
In collaboration with the Nigerian Directorate of Employment (NDE) and the Nigerian Content Development and Monitoring Board (NCDMB), 200 artisans selected from the host communities are currently being trained in the areas of masonry, carpentry, AC electrical works, plumbing, welding, iron bending and auto mechanics.
In addition, 1,026 trucks and tippers have been bought to improve the capacity of local logistic support services as the project steadily progresses towards its 2020 deadline for completion.
In pursuit of this goal, the project contractors handling the job on behalf of the Dangote Group have set up the world’s largest ready mix concrete capacity at any given location to produce ready mix concrete, including 72 concrete pumps and 141 transit mixers, since the annual concrete manufacturing in the country is inadequate.
This development has made it such that the procurement, supply, fabrication and maintenance opportunities in this gigantic industrial project have become abundant for domestic suppliers of construction equipment and materials, in line with Nigeria’s agenda for local content participation in giant projects, especially in the oil and gas sector.
For instance, investigations conducted by Valuechain confirmed that about 16.8 kilograms of perchloroethylene (PERC) is required per day for the reactor generation section alone, while 340 thousand cubic meters of nitrogen is required only for set ups within the petrochemical industrial complex as work progresses.
Also, 320 thousand kilograms of soda ash, or sodium carbonate, is required in the Sulphur Recovery Unit (SRU) of the refinery, just as it is the case in the Crude Distillation (CDU) and mild HYDROCRACKING-MHC process block.
Then, for lubricants, engine service will require 50 thousand litres of engine oil every 250 hours, as well as 50 million litres of lubricant oil every 1000 to 1500 hours of usage of machines or final drive.
In terms of transmission needs, 50 million litres of transmission fluid will be needed every 2000 hours, and this is apart from the other volumes of lubricants that would be required for static and rotating equipment.
Yet, the area of civil construction has a lot more of local content mainstreaming opportunities for Nigerian businesses with the capacity and willingness to seize the moment and do business on the Dangote refinery project.
On its own, the company has bought over 200 units of equipment to enhance the local capacity of site works.
Disclosing the reason behind this to Valuechain, a top level official within the company said that even Julius Berger, Dantata and Sawoe, Hi-tech, and many other civil engineering and construction giants operating within Nigeria have not been able to handle some portions of its construction requirements.