Nigeria Refining Push Prompts $3.6 Billion Petrolex Plan

LAGOS (Capital Markets in Africa) – Nigeria is set to get another new oil refinery as a government push to end fuel imports attracts investors to the industry.

Petrolex Oil & Gas Ltd. plans to build a $3.6 billion plant with a capacity of 250,000 barrels a day, Chief Executive Officer Segun Adebutu said in an interview in Lagos. The closely held company is working on the “front-end engineering design” and will complete construction in 2021, he said.

Nigeria, Africa’s biggest oil-producing nation, doesn’t have adequate refining capacity and imports at least 70 percent of its needs. A government pledge to end such purchases in the next two years by building local capacity has lured investors including Africa’s richest man, Aliko Dangote, who is constructing a 650,000-barrel-a-day refinery. Meanwhile Saipem SpA and other international companies are in talks to rehabilitate the country’s three existing plants.

Petrolex, whose CEO started an oil and fuel trading business about 12 years ago, has also built a storage-tank farm and other “mid-stream infrastructure” for $330 million, Adebutu said Dec. 4. The inauguration of the tank farm and the start of refinery construction — both at the same site in Ibefun, Ogun state — is planned for this month.

The tanks are connected to a pipeline at Mosimi, which will transport products around the country, according to the CEO, who sees a big market in Nigeria’s 180 million-strong population. Petrolex will finance the refinery project with loans from Nigerian banks and international lenders, as well as its own revenue, he said.

The company also plans a fertilizer plant and lubricants facility as well as a liquefied petroleum gas plant, Adebutu said.

Petrolex is targeting listing on the Nigerian Stock Exchange in the next 10 years to ensure the business “outlives its owners” and can fund future expansion, according to Adebutu. “By the next five years we would have achieved a significant amount of our ambition, then begin strategy talks with the stock exchange.”

The company’s current workforce is about 3,000 and Adebutu expects to employ about 10,000 people directly by 2021 when all the energy projects will be “up and running.”