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Dangote Refinery eyeing to be the 5th largest company in Africa

Facts and figures have started to emerge suggesting that the Dangote Refinery, owned by the Dangote Group under the Chairmanship of Aliko Dangote, may become the fifth largest oil refinery in the continent on delivery.

Although the refinery is still under construction in Lekki, Lagos State, Nigeria, it is said that it will have the capacity to process about 650,000 barrels per day of crude oil, making it the largest single-train refinery in the world. Aliko Dangote is said to have invested over $7 billion which is just over 60% of his total net worth, currently valued at $11.6 billion according to Forbes. Once completed the refinery is expected to be Africa’s biggest oil refinery and the world’s biggest single-train facility.

Production Capacity

In terms of production capacity, the Dangote refinery is the largest in Africa, producing 650,000 barrels per day of crude oil. A close second in Africa would be Egypt’s Bashandyoil fossil crude oil refinery which produces 300,000 barrels per day but it is also under construction.

In Asia, the Dangote refinery will be ranked #6 in the continent. In China, only the Sinopec Zhenhai Refinery comes close to the capacity of the Dangote refinery as the refinery can only handle 345,000 barrels per day.

The production capacity of the Dangote refinery also outperforms big oil nations refineries like Saudi Arabia. The country’s largest refinery controlled by Aramco is the Ras Tanura Refinery, which has a production capacity of 550,000 barrels per day. In the United Arab Emirates (UAE), the Dangote refinery will be ranked 2nd. This is because the Ruwais Refinery (Abu Dhabi Oil Refining Company), produces 817,000 barrels per day. In Iran, the Dangote refinery will be outperforming Abadan Refinery, which has the largest capacity in the country with 450,000 barrels per day.

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In Singapore, the ExxonMobil Jurong Island Refinery, which is the largest in the country does not meet up with the Dangote refinery, producing only 605,000 barrels per day. In South Korea, the Dangote refinery will be ranked 5th in the country in terms of capacity, being able to only outperform 1 out of the 5 refineries in the country.

In Europe, Dangote Refinery outperforms all major refineries belonging to well-known oil companies like ExxonMobil, OMV, Royal Dutch Shell, Total S.A and Vitol. Although only one refinery in Russia, called the JSC Antipinsky Refinery, outperforms the Dangote refinery with a capacity of 896,500 barrels per day.

In North & Central America, Dangote’s refinery outperforms all major refineries on the continent, even in big oil states like Texas, America. In Texas, the refinery that comes close to the capacity of Dangote’s is the popular Port Arthur Refinery which is owned by Motiva Enterprises, an American company that operates as a fully owned affiliate of Saudi Aramco. The refinery has a capacity of 636,500 barrels per day.

In South America, the largest refinery, Paraguana Refinery Complex, is considered the world’s third-largest refinery located in Venezuela. Its production capacity is 956,000 barrels per day. Dangote’s refinery will come in second in the region.

Compared to Companies in Nigeria

Dangote Refinery, being valued at $19 billion, represents ₦9.5 trillion when using the Nigerian parallel market rate of ₦500 to $1. Compared to the Nigerian Stock Exchange equity market capitalization, the value of Dangote’s refinery is almost half of the equity market capitalization, representing approximately 48% of the value.

The Stocks Worth Over One Trillion (SWOOT), which includes Dangote Cement, MTN, Airtel Nigeria, BUA Cement and Nestle Nigeria have a current valuation as of the close of yesterday’s market at ₦13.3 trillion. When compared to Dangote refinery, although altogether they are more valuable, the refinery takes up 72% of the total value of the SWOOTs.

Compared to the first-tier banks in Nigeria, represented by the acronym “FUGAZ”, which includes First Bank of Nigeria, United Bank of Africa, Guaranty Trust Bank, Access Bank and Zenith Bank, Dangote refinery is bigger than all their market capitalization put together by 389%.

Compared to Companies in the World

In the oil and gas industry, the refinery will be ranked #30 dethroning OMV, an Austrian multinational integrated oil, gas and petrochemical company. This makes Dangote refinery the largest oil and gas company in Africa with South Africa’s Sasol coming in at second position with a market capitalization of $9.75 billion. Sasol is ranked 44th in the world according to companiesmarketcap.com.

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In Africa, Dangote Refinery will be ranked the 5th largest company on the continent, dethroning Anglo American Platinum, the world’s largest primary producer of platinum, accounting for about 38% of the world’s annual supply, which is currently valued at $13.05 billion. In America, Dangote Refinery will be ranked #422, dethroning Cincinnati Financial Corporation, an American insurance company that offers property and casualty insurance. That being said, the refinery will be bigger than some popular and well-known companies such as Domino’s Pizza ($18.11 billion), United Airlines ($16.91 billion), GameStop ($15.15 billion), American Airlines ($13.60 billion), McAfee ($12.03 billion) and Western Union ($9.40 billion).

In the United Kingdom, Dangote Refinery will be ranked #34. This means that the refinery is bigger than EasyJet, which is currently valued at $5.95 billion. In China, the refinery will be ranked #92 in the country, being more valuable than China’s Hua Xia Bank, which is currently valued at $14.74 billion. In Saudi Arabia, it will be ranked #9, taking the spot from the Saudi British Bank, which is currently valued at $17.25 billion.

Why this matters

The Dangote Refinery, when fully operational is set to be the largest refinery in Africa, the fifth-largest company by market capitalisation on the continent, and the largest single-train refinery in the world. It will put Nigeria in the spotlight for crude oil refining, competing with world refining superpowers in countries such as the United States, China and Saudi Arabia.

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Last year, Mr Devakumar Edwin, Group Executive Director (Strategy and Capital Projects), Dangote Industries Limited, told newsmen that the refinery is a strategic win for the Nigerian economy, with the capacity to create at least 250,000 jobs when it is fully operational.

The refinery alone is set to out produce Nigeria’s three major refineries – the Kaduna, Warri, and Port Harcourt refineries with a combined nameplate capacity of 445,000 bpd. The locally refined petroleum products will not only serve the Nigerian market (thus reducing the forex expended on importation of these products) but will also serve international markets, earning more forex for the nation.