Sovereign Africa Ratings

Africa's largest refinery, the $20 billion Dangote Refinery, has reached a crucial milestone
as it gears up to commence fuel production. The arrival of the first crude shipment on
December 7, 2023, denotes a significant breakthrough for Nigeria's oil industry. The
refinery, officially completed in May, faced delays attributed to a lack of domestic crude
feedstock, hindering its operational launch since May.

A tanker carrying a cargo of 950 000 barrels of Agbami Field’s crude docked at Dangote's
offshore receiving terminal in Lekki, initiating crude supplies for the refinery. The tanker
symbolises the commencement of crude deliveries as the refinery readies for production.
This heralds a new era for Nigeria's Natural Resource beneficiation, marking a credit-
positive impact on the nation's economic landscape.

As part of our sovereign rating methodology, we assess the strength of a country's natural
resource sector, and the operational commencement of the Dangote Refinery offers
substantial benefits. From Sovereign Africa Rating’s (SAR) perspective, the Dangote
Refinery is a pivotal asset, aligning with the Natural Resource Pillar's focus on the effective
utilisation of natural resource wealth to foster economic development through
beneficiation.

Nigeria is positioned as a regional leader thanks to the refinery, which is anticipated to
contribute more than 12% of Africa's product demand and reduce petroleum imports by
36%. This reduction not only contributes to energy security but also strengthens Nigeria's
trade balance. Moreover, the Dangote Refinery's role in generating more than 100 000
job opportunities underscores its socioeconomic impact, a key consideration for SAR.
The growth potential in the cosmetics and plastics industries further diversifies Nigeria's
economic landscape, adding resilience to the overall credit profile.

The Nigerian National Petroleum Company’s (NNPC) 20% stake in the refinery and its
commitment to supplying 6 million barrels of crude oil as feedstock aligns with SAR's
evaluation of the country's management of its natural resources. The utilisation of
Agbami crude, known for its light sweet qualities (low sulphur content), exemplifies
Nigeria's strategic approach to optimising the value of its resources.

Dangote officials have indicated that the initial operational phase will commence at
370 000 barrels per day, with a primary focus on jet fuel and diesel production. As the
refinery reaches full operational capacity, SAR anticipates positive rating considerations
for Nigeria's credit ratings.

The economic benefits for Nigeria are substantial, with the refinery expected to
contribute significantly to the country's GDP. The estimated reduction of petroleum
imports by 36% translates to potentially substantial annual savings, strengthening
Nigeria's foreign exchange reserves.

The growth in the cosmetics and plastics industries, driven by the refinery's operations,
is expected to stimulate economic activity in these sectors. This diversification of the
economy contributes to long-term sustainability and resilience, reducing dependence on
crude oil revenues.

In conclusion, the Dangote Refinery's operational launch is a transformative moment for
Nigeria, not only in terms of energy security but also in economic and social development.
The positive impact on the country's credit profile, driven by effective natural resource
management, positions Nigeria for sustained growth and prosperity in the long term.