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OPAC Refinery: “We Thought We Were the First in Nigeria”

By Foluso Ogunsan and Akpelu Paul Kelechi, in Lagos

The OPAC (Modular) Refinery, located in Kwale, in the Niger Delta basin, has taken so long (Four years) from conception to completion, largely because of the bureaucracy of constructing a hydrocarbon processing facility in Nigeria, in the opinion of Momoh Jimah Oyarekhua, the refinery’s CEO.

“We had various issues, because we were more or less like pioneers, we had to fight for waiver and that meant going through processing, going through the Ministry of Petroleum, going through the Ministry of Finance, going through Customs. At some point it was now gazetted by the Presidency,” Oyarekhua discloses. “While we were waiting for waiver, which took us eight months, we had some of our equipments stolen at the port. Our intention was to complete the refinery by the end of 2018, or maybe if it spills over, in 2019. But we had some of our equipment missing, some of that equipment had to be reproduced, which opened us to cost because we were at the forefront”.  

Oyarekhua’s use of words like “pioneer” and “forefront” would suggest that the OPAC Modular refinery is the first in the country. In truth, as the 10,000BOPD OPAC refinery undergoes commissioning stages, there are already, on ground, two such facilities fully functional: the Niger Delta E&P (NDEP) owned, three- train 11,000BOPD Ogbele Refinery in Ogbele, in Rivers State and the Waltesmith Petroman owned 5,000BOPD Ibigwe refinery in Imo state, on the eastern flank of the Niger Delta basin. 

But this is how Mr. Oyarekhua frames his narrative of OPAC being a pioneer:

“When we were conceiving the idea of this refinery, (in 2017), I truly would say that I did not know any other refinery existed in Nigeria. When we asked around we were only aware there was a one thousand barrel a day topping plant owned by NDPR stripping out the gasoil in their crude. When in 2017 were thinking of actually building a Modular Refinery. Before then, there were licenses and all that. It began to dawn on us that there was a space that we could play”.

Records at the Department of Petroleum Resources (DPR), the country’s regulatory agency, indicate that the ‘authority to construct’ (ATC) a refinery was only granted to Waltersmith Petroman in March 2017, whereas OPAC refinery received its own ATC, six months after, in September 2017. It’s also true that, as of that time, NDEP was only running its first train, a 1,000BOPD (crude oil to diesel) topping plant-a valid refinery itself no doubt- but had not been granted licence to increase the complexity of the unit to the 11,000BOPD refinery it is running today. DPR records show that ATC for NDEP’s second train 5,000BOPD refinery and third train 5,000BOPD refinery, were both granted in December 2018. 

From DPR’s records, then, Oyarekhua’s claim of being a pioneer, despite “meeting” two refineries on ground, is not necessarily wrong. 

But OPAC had other challenges that ensured the facility’s delay in delivery.

“This project is financed by equity, there isn’t debt. When there are variations, we go back to the drawing table trying to raise money. It’s different from the WalterSmith one that government through NCDMB gave money and all of that. Our models are different, we could be struggling at some point, but they already had everything well worked out”. 

The full interview with Momoh Jimah Oyarekhua, CEO of OPAC Refinery, can be read in this link.

Local Refining Can Consume $Billions of Scarce Nigerian Forex


Funding is the Challenge for Ugandan Government’s Stake in Refinery

With the conclusion of agreements to launch the upstream and midstream segments of the Lake Albert development project, discussions are shaping up around financing close for the 60,000BOPD. 

The government holds a 40% participating interest in the refinery. The Uganda National Oil Company (UNOC) is taking up the biggest shareholding in the project through one of its subsidiaries, the Uganda Refinery Holding Company (URHC), on behalf of the state. “We have a role together with the refinery consortium in ensuring that the refinery makes a final investment decision in 2022, in accordance with the timelines of the Project Framework Agreement”, says Proscovia Nabbanja, CEO of UNOC.

The Albertine Graben Refinery Consortium, which holds 60% of the project, consists of General Electric (GE), Yaatra Ventures LLC, Intracontinent Asset Holdings and Saipem SPA.

The refinery is expected to come on stream between 2024-2025. “There’s a lot of work being done today, such as the environmental and social impact assessment and the front-end engineering design”, Ms. Nabbaja explains. “We are also working with the Ministry of Finance to secure financing for our equity in the refinery”, she notes. 

But the Ugandan government is stretched thin. In the last five years, it has expended close to $2Billion on infrastructure, to equip the country to handle the oilfield project, which will see over 10 fields in the Hoima district producing 230,000BOPD at peak.

“Without financing you can only do so much”, Nabbanja says.“If you are going to play as a contracting party or partner within the agreements, then you must have the financing”.

She says that Financing is not only for UNOC’s equity participation; “to deliver on your strategy, you must have a good target operating model and you must have resources for it. Internally, we have defined the financing needs for UNOCoperations to make ourselves field-ready and capacitated for that time when we actually get into execution mode for the projects”.


Angola Gives the Nod to Quanten to Build the Soyo Refinery

The Angolan Ministry of Mineral Resources and Petroleum (MIREMPET) has selected the Quanten Consortium to build, own and operate (BOO) the 100,000BOPD refinery in Soyo, in Zaire Province, the north easternmost province of the country.

The American led group’s proposal beat seven others from groups that included Atis Nebest-Angola, SDRC, Jiangsu Sinochem Construction Co., Tobaka Investment Group, Satarem, Gemcorp Capital,  China Petroleum Pipeline (CPP) Engineering Firm, and the consortium formed  by CME, Aida and VSF.

Africa’s second largest crude oil producer launched the $3.5Billion tender for the work in October 2019. 31 companies expressed interest in delivering the facility. The refinery is scheduled to begin production in 2024. Soyo is one of three refinery projects, with combined capacity of 350,000BOPD, that the Angolan government wants to see executed by 2025.

Construction work is also ongoing at two other sites (1) the 60,000BOPD refinery in Cabinda, also brand new and (2) the Luanda Refinery, an existing crude distillation facility which is undergoing an upgrade that will increase the current output of gasoline from 72,000 tons to 450,000 tons per year.

 

 

 


Angola to Announce EPC Contractor for Soyo Refinery Next Week

The Angolan Ministry of Mineral Resources and Petroleum (MIREMPET) will, on March 15, 2021, announce the winner of the tender to build the 100,000BOPD refinery in Soyo, in Zaire Province the north easternmost part of the country.

At the start of final evaluation, there were nine proposals from groups that included Atis Nebest-Angola, SDRC, Jiangsu Sinochem Construction Co., Tobaka Investment Group, Satarem, Gemcorp Capital,  China Petroleum Pipeline (CPP) Engineering Firm, Quanten Consortium, as well as a joint proposal submitted by CME, Aida and VSF.

 

One of them has since dropped out, which means that eight companies and consortia had their proposals evaluated by PwC, the government’s due diligence consultant, as of December 29, 2020.

But MIREMPET postponed the announcement, for the second time in January 2021, in order that the best ranked competitors could renew their investment financing guarantees, “through renowned financial institutions, as well as re-affirmation of the corporate structures involved”, the ministry says in a statement.

The Soyo refinery is one of three refinery projects under development by the Angolan government. One is to expand the capacity of the Luanda refinery, another is the two-phase construction of a new 60,000BOPD refinery at Cabinda, which is underway.

 

 


Algeria is Now A Net Exporter of Gasoline

By Toyin Akinosho

Algeria has returned to being a net exporter of gasoline, the most in-demand product of distillation of crude oil.

The country began exporting both gasoline and diesel, in 2020, the first time it is doing so in the last decade, the Algerian Press Agency reports.

Algeria used to be self-sufficient in petroleum products. Up until 2009 it was the only country among the top three African hydrocarbon producers to have enough products to spare for the export market. But years of under investment has dragged Algeria into the same product-import league in which Angola and Nigeria have been top card-carrying members for over 20 years.

With the ramp up of the Algiers refinery, Sonatrach, the country’s state hydrocarbon company and sole domestic refiner of Algerian crude oil, says it produced 9.5 Million tons of diesel and 3.4Million tons of gasoline in 2020.

Algeria ended its imports of diesel in March 2020 and ceased its import of gasoline in August of the same year as refining activity increased by 7.4% in the volumes of oil and condensate processed compared to 2019, from 27.2Million tonnes to 29.1million tonnes.

 

 


NCDMB Will Extend Its ‘Transitional’ Equity to Ibigwe Expanded Refinery

Nigeria’s National Content Development Monitoring Board (NCDMB) will invest in the next phase of the Waltersmith Refinery in Ibigwe, Imo State, on the eastern flank of the Niger Delta basin.

The board is a 30% participant in the first phase, a 5,000BOPD facility with output capacity of 271Million litres of Petroleum Products, per year.

But whereas the NCDMB’s $10Million investment in the first phase is transitional equity, which means it is expected to pull its funding when the project is developed, the board is impressed enough with the first phase that it is committing itself to the 25,000BPD Phase 2 Condensate Refinery, for which Final Investment Decision is under active consideration.

“Yes, we will continue”, Simbi Wabote, the NCDMB Executive Secretary told Africa Oil+Gas Report. “They have done what they said they would do and we are happy with them”.

Abdulrazaq Isa, Chairman of the board of Waltersmith confirmed the development to Africa Oil+Gas Report. “Ÿes they are working with us on the second phase”, he said.

The 25,000BPD Condensate Refinery will utilize feedstock from the nearby ANOH Gas Processing Company (AGPC) “and some additional commercial discussions were progressed on some nearby oil and gas assets”, Waltersmith says in a briefing.

Front End Engineering Design (FEED) for the 25,000BPD Phase 2 Condensate Refinery was completed in Q1 2020, Feasibility study in Q22020 and the EPCIC Contracting process has been initiated while delivery is expected by Q4 2022.

The groundbreaking ceremony was done in conjunction with the commissioning of the Phase 1 Refinery in November 2020 by President Muhammadu Buhari.

When completed, the Phase 2 will deliver about 1.4Billion litres per year of refined petroleum products (Premium Motor Spirit – PMS, Diesel, Kerosene, Aviation Jet Fuel and HFO) in addition to the 271 million liters from the Phase 1 Refinery.


Gasoline to Start Flowing Out of Ogbele Refinery from 2nd Quarter 2021

By Macson Obojemuemoin

 The Nigerian independent, Niger Delta E&P, is anticipating the first flow of gasoline from its 11,000 Barrels of Oil Per Day (BOPD) refinery on the Ogbele field, in Rivers State, in the east of the country.

The three-train modular refinery has the capacity to produce a daily output of 600,000 Litres of gasoline, the most important petroleum product in the Nigerian market.

Gasoline is the fuel of road transportation. In the post COVID-19 world, it will be the most economically viable, of the major fractionation products of crude oil refineries around the globe.

The 600,000 Litre capacity at Ogbele, if delivered consistently at optimum, is easily around 30% of what the entire state owned NNPC produced, with input capacity of 445,000BOPD, in 2018, the latest year for which officially sanctioned data is available in the public domain.

The Nigerian Oil and Gas Industry Annual Report 2018, published by the Department of Petroleum Resources, reports that NNPC produced 2,043,070 litres of gasoline per day, making 745.7Million litres in the year.

NNPC’s entire in country gasoline production in 2018 was however about 4% of the entire imported volume of the product by the company, which came to 53.592Million litres a day. Clearly there’s significant opportunity in local production of gasoline.

There was no production at the state-owned refineries in the entire year 2020, due to ongoing rehabilitation work, NNPC states in its November 2020 report.

The Ogbele refinery project initially came on stream in 2012 as a 1,000BOPD capacity topping plant, producing 85,860 litres of diesel every day from 540BOPD of crude.

In late 2019, a second 5,000BOPD train was added.  With another 5,000BOPD train completed last October, the three train 11,000BOPD refinery with capacity to output Diesel, Marine Diesel, DPK, Naphtha and High Pour Fuel Oil was completed.

Now that all the trains are running optimally, the Train 3 will fully convert all Naphtha to Premium Motor Spirit (Gasoline) at an average daily output of some 600,000 Litres.

 

 


VFuels Wins the Contract to Build the Processing Units of the Cabinda Refinery

By Foluso Ogunsan

VFuels, the American refinery constructor, will be fabricating, constructing and installing the Inside Battery Limits (Processing Units) of the Cabinda Refinery in Angola.

The contract is in the making.

Construction is expected to take 18 months. The processing units include the Crude Distilation Unit (CDU) and Merox (acronym for Mercaptan Oxidation).

VFuels constructed the ISBL of the Waltersmith Refinery in Ibigwe, in the east of Nigeria.

United Shine EPC Consortium is the EPC contractor mandated by the Angolan government to Build, Own and Operate the Refinery, after it won a keenly contested bid to build the facility. It will hold 90% in the facility, in partnership with the state hydrocarbon company Sonangol, whose subsidiary -Sonangol Refinación – Sonaref SA holds 10% equity.

The Cabinda Refinery is planned to process 60,000Barrels of Oil Per Day in two phases, with 30,000BOPD in each phase. The first phase will output Diesel, Kerosene, Heavy Fuel Oil-HFO and Naphtha, without Gasoline. In the second phase, Gasoline production will be introduced, in addition to the entire product line of the first phase.


Waltersmith Formally Gets Seplat’s Nod as a Supplier of Refinery Feedstock

Seplat Petroleum has formally signed off on an agreement to supply between 2,000 and 4,000 Barrels of Oil Per Day from its working-interest production fin the Ohaji South Field in Oil Mining Lease (OML) 53 to Waltersmith Petroman Limited’s just completed 5,000BOPD capacity refinery in Ibigwe, in the east of Nigeria

Seplat, a Nigerian independent listed on both the Nigerian Stock Exchange and the London Stock Exchange, has operated output of about 7,000BOPD in the field at optimum, of which 2,800BOPD is its current, optimal working interest.

Previously, Seplat’s share of Ohaji South crude was primarily evacuated to the export Terminal via a third-party Crude Handling Agreement with Waltersmith.

“This new agreement benefits Seplat by selling its crude oil directly to Waltersmith for refining, thereby eliminating crude losses and downtime experienced along the evacuation and export route. The transaction would also boost the capacity of Waltersmith in providing its products particularly to the immediate region of our operations thereby supporting Seplat’s commitment to national energy security”, Seplat says in a release.

“This Crude Purchase Agreement with Waltersmith ensures that Nigerian crude will be refined locally by a Nigerian refiner”, says Roger Brown, Seplat’s CEO. “The agreement will eliminate losses we previously experienced on the export pipeline, meaning more revenue will be booked by Seplat for the same amount of oil produced from the field. Waltersmith’s refinery will also benefit the Nigerian economy by creating local jobs to refine our oil.”

Seplat maintains its guidance of 48,000 – 52,000BOEPD for the 2020 financial year.


NNPC Opens Bids for EPC Contracts for PH Refinery Revamp

By Ahmed Gafar Alade, in Lagos

Nigerian National Petroleum Corporation (NNPC), the Nigerian state hydrocarbon company, has publicly opened bids for the Engineering, Procurement, and Construction phase of the rehabilitation of the Port Harcourt Refining Company

A company statement claims that the exercise was “a new chapter” in the corporation’s  refineries rehabilitation project

The event, which held virtually, had in attendance external observers such as the Bureau of Public Procurement (BPP), Nigeria Extractive Industries Transparency Initiative (NEITI) and the Civil Liberties Organizations, according to a press release by Kennie Obateru, the Group General Manager, Group Public Affairs Division, “This signals the imminent take off of the second phase of the rehabilitation of the Port Harcourt Refinery whose first phase was completed earlier in the year”, the statement says.

The bids were submitted electronically and, the NNPC says, they would be viewed virtually.  They were submitted through the NipeX portal for the pre-qualification for technical evaluation. The NNPC statement contains assurances that “the process provides a level playing field for all bidders”.

In the press release, Mele Kyari, Group Managing Director of NNPC, restated the Corporation’s oft repeated statement that it was committed to revamping the four Refineries including the Warri Refinery and the Kaduna Refineries.

The NNPC has announced revamps of its refineries, all of them with total input capacity of 445,000BOPD, several times in the last 20 years. It is now self-evident that there haven’t been any revamp in those years.

Last July, Kyari said that the failure to fix the refineries over these years was a strategy problem, as they never knew what they wanted to do with it. He said that the corporation didn’t get the right advisory services and the right strategy to go through with it.

 

 

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