Dangote refinery’s crude hunt puts Guyana in the spotlight

(REUTERS) Guyana’s rapidly expanding oil industry is emerging as an increasingly important player in Africa’s refining ambitions, with Nigerian billionaire Aliko Dangote’s massive refinery already turning to Guyanese crude to help meet its feedstock needs.

Nigeria’s Dangote Refinery, the largest on the continent, is expected in October to seek to raise around $5 billion in Africa’s biggest IPO listing yet, after months of strong earnings, boosted by the disruption caused by the Iran war. For potential investors, the question is whether Dangote, majority-owned by Africa’s richest man, Aliko Dangote, can avoid squeezing its profits while sourcing enough crude oil for its plans to double capacity within three years, in part funded by the initial public offering.

“If Dangote’s only supplier of oil is Nigeria… this does increase the risk of the refinery as an investment,” Rob Thummel, senior portfolio manager at U.S.-based Tortoise Capital Management, said. Dangote does not disclose its margins, but as a whole the refining industry has benefited from higher profits ⁠since the disruption in the Middle East increased demand for alternative sources of fuel. Dangote was particularly well-placed to meet demand across Africa and beyond. A new, efficient refinery, it reached its initial maximum capacity of 650,000 barrels per day in February, just before U.S.-Israeli attacks launched the war on Iran.