By Foluso Ogunsan
Abdulrazaq Isa, Chief Executive of Waltersmith Petroman, has responded to the prevailing opinion that small refineries are inherently loss making.
“That modular refinery does not make money? I do not hear that. I do not see it. I have gone to a global financial institution, the African Finance Corporation (AFC) and convinced them to give us money to fund our project”.
Waltersmith Petroman is holder of the Ibigwe marginal field in OPL 2004, on which a small (5,000BSPD) refinery started construction two months ago.
Isa points to the basic financials of the refinery project situated on an oil field in the Niger Delta, and in the vicinity of other oil fields.
“Let us look at the cost structure for producing and exporting oil from where we are. Just the cost of producing the oil, putting it in the line and exporting it is almost $8 per barrel. This is the transportation cost alone. This cost has been growing. We probably started at about $5 per barrel. So, if I produce crude and it is sold at $50 per barrel, you have to first remove $8.
So by putting that refinery right in the field, where we produce the oil from that field, or take oil from nearby fields, we have eliminated that $8 cost. This is a huge margin for us, before we even do the refining”.
Isa also provides details on converting the challenges of pipeline losses to profits by insitu beneficiation.
