By Utkarsh Shetti
DUBAI (Reuters) -Nigeria’s Dangote has tapped Honeywell to provide services and help double its refining capacity to 1.4 million barrels per day by 2028, in what is the clearest indication yet that its plans to become the world’s largest petroleum refinery are bearing fruit.
The agreement will allow Dangote to process a broader range of crude grades to help support the planned expansion in output with the help of Honeywell’s catalysts and equipment, the companies said on Tuesday.
Dangote will also look to increase its 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 contracts of such nature tend to vary based on the project’s complexity, a source familiar with the situation said it could be valued at over $250 million.
Nigeria is Africa’s largest crude oil producer, yet for decades it imported nearly all its refined fuel due to non-functional state-owned refineries, leading to chronic fuel shortages, subsidy scandals, and heavy pressure on foreign exchange reserves.
The Dangote refinery, which is Africa’s largest and the world’s biggest 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 surplus for export.
With $20 billion spent to build the refinery in Lekki, Lagos, Dangote last month laid out 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 that capacity, Dangote would be able to process nearly all of Nigeria’s current crude production of around 1.5 million bpd.
The agreement comes as Honeywell, once a conglomerate that is now in the process of splitting itself up, is shoring up revenues ahead of a planned carve-out of its aerospace business, which is currently its biggest cash cow.
(Reporting by Utkarsh Shetti in Dubai; Editing by Daniel Wallis)
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