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Dangote plans to buy some marginal oil fields

by Business News Report

 DangoteDangote Group, controlled by Africa’s richest man Aliko Dangote, is considering the purchase of Nigerian oil fields as international companies plan to sell onshore assets in Nigeria. The company, which has interests from cement to sugar, needs to secure a supply of crude oil and a “substantial amount of gas” for a $9 billion oil refinery and petrochemical complex it plans to set up, Group Executive Director Devakumar Edwin, has disclosed in Lagos. The company also needs energy for its cement plants in the country, he said.

“We’re seriously thinking of investing in oil blocks both for gas and for oil,” Edwin said. “We’ve started talking with some companies which are divesting from onshore,” he said, declining to name them.

International oil and gas explorers including Royal Dutch Shell Plc and San Ramon, California-based Chevron Corp. are selling onshore and shallow-water fields in Nigeria amid persistent violence and crude theft in the Niger Delta, with smaller Nigerian companies taking their place.

Dangote “will require feed stock for the refinery,” Pabina Yinkere, the head of research at Lagos-based Vetiva Capital Management Ltd., said by e-mail today. With its “aspirations of becoming a global cement name, and the importance of energy in the cement production process, this could serve as a complement in the long run.”

Dangote Group believes it can manage unrest and aggrieved communities in the region with corporate social initiatives, Edwin said.

“We know the terrain much better, we know the risks and we believe that the risks can be managed,” he said. “The primary risk is people blasting your pipelines. I wouldn’t like to go and invest in a block which is totally inland and then I have to start buying inland pipelines.”

Dangote’s complex will include a 400,000-barrel-a-day refinery, a 2.8 million-metric-ton urea plant and a petrochemical factory to produce polypropylene, used to make plastics. The company plans to expand the refinery capacity by another 100,000 barrels, Edwin said.


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