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Forty Functional Modular Refineries, on Forty Marginal Fields, Will Eradicate Crude Oil Theft

By: Abdulwaheed Sofiullahi, in Abuja

The Crude Oil Refinery-owners Association of Nigeria (CORAN), has presented a solution to the incessant crude oil theft, which threatens to choke off investment in the country’s oilfield development.

The proposal involves the installation of one 10,000 Barrels Per Stream Day refinery per marginal oilfield, leading to 40 such refining plants on 40 marginal fields in the Niger Delt basin.

These 40 plants on forty fields will have a combined 400,000BPSD capacity to service different regions in the Niger Delta basin, CORAN has suggested.

About 20 members of the advocacy group, led by its chairman, Momoh Jimah Oyarekhua, were received at the office of the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, in Abuja last week.

“This approach will enable the processing of a minimum of around 400,000 barrels of crude oil for refining, subsequently impacting petroleum prices and alleviating the current economic pressures faced by the country on foreign exchange”, Oyarekhua said.

There are currently five functional Modular Refineries operating in the country, with a total nameplate input capacity of 34,500BPSD.

But the actual input into these five plants is no more than 15,100BPSD and those numbers are very optimistic.

Out of the five, for example, only two have dedicated oilfields supplying volumes of crude in excess of 3,000Barrels of Oil Per Day. They are:

  • Aradel Holdings’ Three Train 11,000BPSD Ogbele Refining Facility, which has utilized, sometimes, as high as 6,600BPD of crude from the Ogbele field in the last three months.
  • Waltersmith Petroman’s 5,000BPD refining plant, which receives 3,000BPD supply from Waltersmith’s own Ibigwe field, as well as between 2,000BPD and 3,000BPD from Seplat’s Ohaji field in the vicinity.
  • The OPAC refinery, which receives, on average, 1,500BPD from Pillar Oil’s Umuseti marginal field
  • Edo Refinery (published: 6,000BPD capacity) and Duport Midstream Refinery (advertised: 2,500BPD), both in Edo State, collectively receive, at the most, only 500Barrels per day, by trucks from Millenium Oil & Gas/ Decklar Resources’ Oza field in Abia state of Nigeria.

What CORAN wants, is for government to help guarantee the supply of crude to modular refineries which lack “stand by”, crude oil supplies. CORAN is hoping that the government, through with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will engage the group “based on the regulation that has been passed for domestic crude obligation. That obligation compels crude oil producers to supply a share of their crude to local refineries”.

The NUPRC has once claimed in a media release that it had supported modular refineries with crude oil supplies through the Domestic Supply Obligation, but CORAN members vigorously deny this claim, in private, as they do not want to be seen as wrangling with the country’s most powerful petroleum regulatory  agency, in public.

CORAN has also advocated for intervention fund for modular refining business the way government has intervened in the natural gas business. “The buzz everywhere now is about clean energy and government has created funds that people who want to build infrastructure for gas will be able to access; and recently we hear of auto gas and some of those few things that they are trying to do in the gas space”, Oyarekhua told Africa Oil+Gas Report.  “It is impossible for you to think that gas is going to solve all the problems that people or the society will require for their energy. Fossil fuel will still be with us for a long period of time so once you’re creating some form of succour for gas to be produced, which of course will also take a period of time, you also have to support the existing energy producers like us who are in the refinery space that are providing refined products for the society, part of which is diesel, fuel oil and kerosene until such a time where the gas industry is ripe enough. I think gas and fossil fuel are going to be ranked side by side continuously for a very long period of time. But as of today, the focus is on PMS and we are saying that the kind of funds that people who are creating or building gas infrastructure could access, there should also be that kind of fund created for the refinery industry or refinery owners to access in that space. This is what we advocating for”.

At the meeting in Abuja with the Minister of State for Petroleum (Oil),  Oyarekhua  stressed: “Our foreign earnings today are being significantly affected by the importation of roughly 30 to 40 percent of refined products into the country. These are the issues we have come to discuss with the minister, seeking government intervention through reliable supply and guarantees for those in the modular refinery sector”.

 


Ghana Grows Modular Refining Capacity

Ghana’s 45,000Barrels Per Stream Day (BPD) Tema Oil Refinery is not functioning. But the country has had two modular refineries in the last five years: the Platon Refinery and Akwaaba Link Investment Refinery, which collectively have combined nameplate capacity of 8,000BPD.

Under construction is another modular facility; the 40,000BPD Sentuo Oil Refinery (Phase 1) now reportedly 80% complete and would be commissioned before the end of 2023.

The Refinery’s expansion phase is expected to add an additional 20,000BPD or 1Million Tonnes Per Year, (taking full capacity to 60,000BPD) but that is after the First Phase is delivered. Total investment at the 60,000BPD mark, is expected to reach around $3Billion.

 


NUPRC Has Enabled Close to 4 Million Barrels of Crude Supply to Nigeria’s Small Refineries

By Abdulwaheed Sofiullahi Adeniyi, AOGR Reporter, covering  Regulatory Authorities/SOEs

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has written to debunk allegations that lack of access to crude oil supply is inhibiting investment in mini-refineries, especially by companies who are non-producers of crude oil.

The commission says it has enabled the supply of 3,614,936 barrels of crude to three local refineries between September 2021 and May 2023, using the instrumentality of Domestic Crude Supply Obligation.

This, the commission declares, is “contrary to insinuations from some operators in the refinery business in Nigeria that the continued failure to supply local refineries with crude oil is capable of destroying members’ investment and stifling growth in the sector”.

The NUPRC indicated, in a statement, that only refineries that comply with the relevant requirements of Section 109 of the Petroleum Industry Act, 2021 are entitled to crude supply.

“Between January 2019 and August 2021, the period before the PIA came into effect, 1,726,049 barrels of oil were supplied to two refineries that met the requirements of the law as at the time. The two refineries are operated by Waltersmith and NDPR (now Aradel Holdings). The post PIA supplies were made to Waltersmith, NDPR and OPAC refineries”, NUPRC stated.

The Commission said it recently granted approval for Millennium Oil and Gas Limited to supply by trucking 60,000 barrels of crude oil at the rate of 20,000 barrels per month for three months to Edo Refinery and Duport Refinery in Edo State in Nigeria’s midwest. “In addition, alternate evacuation routes such as trucking of crude oil to refineries has been approved to forestall potential downtime during refinery operations which might arise due to non-availability or vandalism of pipelines”.

NUPRC insists it remains steadfast in delivering on the mandate stipulated by the PIA and will not relent in ensuring that a conducive and suitable supply of feedstock to all licensed refineries operating within the country is sustained. It further stated that any refinery operator or group of refinery operators in Nigeria not receiving or claiming not to be receiving feedstock from appropriate agencies are yet to satisfy the mandatory requirements as stipulated by law.

“The NUPRC wishes to state the facts to provide insight and clarity to the general public as follows: Section 109 of the Petroleum Industry Act (PIA) 2021 mandates that the Domestic Crude Supply Obligation (DCSO) be placed on all holders of Petroleum Mining Leases and Oil Mining Leases in Nigeria in a bid to ensure crude oil supply to local refineries. Under Section 109(2) of the Petroleum Industry Act, the Commission gazetted the Production Curtailment and Domestic Crude Oil Supply Obligation Regulations which provides clarity on the obligations of the stakeholders of the domestic crude oil supply value chain.

“The PIA prescribes its implementation mechanism requiring the Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMDPRA) to furnish the Commission with domestic crude requirements of licensed operating refineries on an annual basis which would form the basis for the Commission to issue the crude supply obligation on the producing companies in the upstream sector. It also mandates the requirement for the transaction to be on an arm-length commercial basis between the producer/supplier and the refiner.

“The Commission has provided an enabling framework for the supply of crude oil to be negotiated between the lessee and the oil refining licensee, having regard to the prevailing international market price for similar grades of crude oil as stipulated in section 4 (7) (b) of the Domestic Crude Supply Obligation (DCSO) regulations in either the Nigerian Naira or the United States Dollar or a combination for flexibility to be agreed by the parties.

“Consequently, the Commission placed priority on developing this regulation for the operationalization of the mandate and developed the regulation to ensure the availability of a regulatory framework for DCSO. The Ministry of Justice has gazetted the Domestic Crude Oil Supply Obligation Regulations developed by the Commission, which provides the framework for placing crude oil supply obligations to operators of petroleum mining leases and Oil Mining Leases in Nigeria.

“Section 4(8) of the DCSO regulations states that “A lessee who has not complied with his DCSO where a willing buyer(s) exist shall not be granted an export permit for the export of crude from his lease area.” This further reaffirms the Commission’s drive to enforce DCSO to holders of oil leases within the country.”, the NUPRC concludes.


NDEP, in a Profit Surge, Acquires a New Field, Announces a Name Change and Finalises Drilling Campaign

Nigeria’s top homegrown E&P firm, Niger Delta Exploration & Production Plc (NDEP), has announced a 28% year on year increase in revenue, proposed a large dividend for its shareholders, is finalizing an upstream asset acquisition, wrapping up an infill drilling campaign, and has determined it wants to rebrand with a name change.

The company’s gross profit increased from $39Million in 2021 to $100Million in 2022. Its operating profit more than doubled year on year from $30Million to $69Million, with operating margin in ascent from 23% to 41% in US dollars.

Profit after tax (PAT) crashed from $73Million to $35Million and return on equity plunged from 10% to 5%.

This relatively healthy balance sheet was achieved in the context of a significant drop in hydrocarbon output in NDEP’s sole producing field-the Ogbele field-as a result of the nine month outage of the Trans Niger Pipeline, (TNP), the crude oil export pipeline.

Average daily crude oil output dropped from 8,761Barrels of Oil Per Day (BOPD) to 3,945BOPD and accompanying gas production headed south to 6.51Billion cubic feet (Bcf) in 2022, 31% lower than the 2021 9.39Bcf  in 2021.

Still, based on the result of front-end studies commissioned in anticipation of further development of the Ogbele Field, NDEP commenced a four-well drilling campaign in September 2022 -right in the midst of the uncertainty wrought by the pipeline outage. That campaign has been largely successful and it is expected to be completed in Q4, 2023.

The company is also in the final stages of an upstream asset acquisition (and subsequent development) which is expected to be completed in 2023. NDEP did not provide the name of the asset.

While the upstream business was massively constrained, the downstream unit practically took off. NDEP says that the focus of realizing value in 2022 was the company’s 11,000BPSD capacity refinery complex. Refined delivery volumes rose 105.0% to 152.84Million litres (MMlitres) relative to 74.53MMlitres in 2021, “driven by debottlenecking the refinery production from upstream oil production and actively pursuing its monetisation strategies. Capacity utilisation improved to 24.0% from 12.5% in 2021; underscoring further upside potential as well as additional opportunities that exist to further optimise the refinery business”.

NDEP apparently feels good about its place in the sun and has determined that it is time for a rebranding and official name change. It is the first name change in 27 years. NDEP was incorporated on March 25, 1992 (as the Midas Drilling Fund) and assumed its current name in November 1996. The company plans an elaborate coming out party in August 2023 to unveil its name change to Aradel Holdings Plc “as part of a strategic rebranding initiative aimed at better reflecting the Company’s current portfolio and positioning it for future growth”, its management says in a release.

The integrated indigenous energy company says that the name change underscores its commitment to repositioning itself as a leading African company, dedicated to providing sustainable energy solutions that drive economic growth now and in the foreseeable future.

“This unique name honours our heritage and 30-year legacy as an industry pioneer while reflecting our current portfolio and future ambitions”. ‘Gbite Falade, Chief Executive Officer of NDEP, enthuses.

“Over the years, our business has evolved significantly, and we have successfully expanded our presence across the entire value chain of the oil and gas industry, including renewable energy. The new brand, Aradel Holdings Plc, not only represents our present endeavours but also encompasses our future aspirations”, the company explains

 

 

 

 


Angola Moves Ahead with Chinese Builders on Lobito Refinery

Angola’s state hydrocarbon company, Sonangol, has signed a memorandum of understanding with China National Chemical Engineering (CNCEC) to construct the Lobito Refinery in the coastal Benguela province.

Sonangol’s CEO, Gaspar Martins, signed the document in Beijing, in the presence of minister of Mineral Resources, Oil and Gas, Diamantino Azevedo.

The MoU follows a public tendering process launched in late 2022 for interested companies and individuals to invest in the Lobito refinery, in the country’s southwest. Private investors will own 70% of the company, the tender advised, with Sonangol controlling 30% stake, according to the proposed corporate governance structure.

Angolan news agency ANGOP reports that “the infrastructure will supply the domestic market and the countries of the Southern African Development Community (SADC) region”.

The Lobito Refinery, the largest of Angola’s four planned refinery projects -as newbuilds or overhaul- has the capacity to process 200, 000 barrels of oil per day.

Angola’s oldest refining facility, the 65 year old Luanda Refinery, underwent a refurbishment in the last three years; increasing gasoline production from 395,000 litres to 1.5Million litres per day.

The Cabinda refinery, under construction, with a capacity for 60,000BPSD, will enter the first phase of completion in late 2023, with the second phase expected to be completed in 2025. In this project, Sonangol holds 10% and GEMCORP 90% in terms of corporate structure.

In Soyo, Zaire province, the American company Quanten leads a consortium constructing the 100000BPSD Soyo Refinery under a build, own and operate (BOO) contract. Sonangol holds 10% in the corporate structure, while the Quanten led consortium retains 90%.

As recently as the end of December 2022, Quanten reported on its website it had completed the “Demining of the entire 712 hectares of the Soyo Refinery project site”.


Expectations about Dangote Refinery Inauguration are Extremely Exaggerated

By the Editorial Board of Africa Oil+Gas Report

The ceremony around the planned visit by the Nigerian President to the Dangote Refinery on May 22, 2023, will peak with a cutting of the ribbon, ‘inaugurating’ the 650,000Barrels per Stream Day Plant, located in the eastern flank of Lagos, the country’s commercial city.

Everyone, it seems, looks forward to production of petroleum products from the plant after that symbolic activity.

But it will not happen.

As President Muhammadu Buhari leaves office a week after “commissioning” of one of the largest, single train hydrocarbon processing plants on the planet, he could be forgiven for believing he had had his wish to be in such a large place, but technology does not sit well with politics.

The ongoing technical commissioning process has not gotten anywhere close to the point of introducing raw hydrocarbon into the plant, let alone delivering petroleum products.

One key challenge of Nigeria’s chattering classes is that they hardly look up the regulation. Hydrocarbon will be introduced only when the Nigerian Midstream Downstream Petroleum Regulatory Agency (NMDPRA) approves and issues License To Operate the Refinery to Dangote.

Speculations about ‘inauguration’ and ‘commissioning’ are just, well, speculations. Both words do not appear anywhere in the ‘Procedure to License A Refinery’ in Nigerian law. The three stages are:

  1. License to Establish a Refinery
  2. Approval to Construct the Refinery
  3. License to Operate the Refinery.

Nowhere does inauguration or commissioning appear. So, the Refinery can be inaugurated or commissioned as the Licensee desires, as long as no attempt is made to operate the Refinery by introducing crude oil and make products For Sale, it does not concern NMDPRA.

The claim that some “large sub-sea pipeline infrastructure connected to Oil and Gas blocks in the Niger Delta region for supply of crude feedstock” is a false narrative. What’s in the plan is that Single Point Mooring (SPM) buoys will play the transportation role in input crude delivery and output petroleum products.

We live in a society where optics trumps everything. Buhari has been President for 8 out of the 9 years that the Refinery Project has been on. What is wrong with Dangote asking President Buhari to inaugurate the Refinery, so his name is on the marble when the facility becomes fully functional? Afterall no law will be breached by such a gesture?

That said, Aliko Dangote, the billionaire owner of the refinery, is determined that the $19Billion project, the second of his three, hydrocarbon processing mega projects (Fertiliser, Refinery and Petrochemicals) is delivered by end of 2023.

The technical work has gone far: involving trial-running every single equipment, which has taken a while because of the length time of mechanical construction. Some equipment were installed six years ago, and were just standing there, in the air, water or even underground. Anything, literarily, could have happened.

As of February 2021, the installation of the Crude Distillation equipment had been completed.

So had the kitting up of the Residue Fluid Catalytic Cracking Unit (RFCCU).

Supply chain challenges thrown up by the COVID- 19 did slow down work, but the construction of Africa’s largest hydrocarbon processing factory picked up steam again in mid-2021.

“The electricals and instrumentation works are usually invisible to the gaze of non-refinery workers, but they are key: their installation needed extreme care and it consumes over 30% of the refinery construction time,” say several  managers familiar with the project.

“A lot of our contractors are Chinese. Those who went home couldn’t come back quickly, but the project workflow recovered and those installations, especially that of the Crude Distillation Column, which arrived Nigeria in December 2019, were expedited”.

“We will have 15 process units in the refinery, and they must all work together”, the managers tell us.

The operations planning will emphasize the mantra at the commissioning: “We must flow everything out with air, then do it with water, then with steam, then with air again”.  This is all to ensure that the likelihood of moisture absorption is zero, as the contrary will lead to cracks.

“The equipment must be pickled. What that does is that it oxidizes the facility”.

The Dangote Refinery is significantly an Indian supervised operation.

But a significant percentage of the 1,000 Nigerian engineers sent to training in India for the eventual operations of the facility, have returned and are currently engaged on site.

The relationship between the Nigerian crude oil refining sector and Indian engineering expertise goes back as far as 1988, when the second (larger) refinery in Port Harcourt, the major city in the country’s oil producing Delta region, was being constructed.

“Some of the experts working on ‘Operations Planning’ were part of the construction of the Port Harcourt Refinery 35 years ago”, our sources say.

Mr. Dangote initially announced the likelihood of the project in 2013. But it was at the All-Convention Luncheon at the annual conference of the Nigerian Association of Petroleum Explorationists (NAPE) in November 2014, that he provided the first relatively comprehensive details of the facility. He told the roomful of geoscientists that the capacity had increased from 500,000BSPD to 650,000BPSD

Dangote Industries was advised by Jacobs Engineering and it licensed the Honeywell UOP for the basic engineering design. On a daily basis, the facility will have the capacity to produce 59 Million litres of gasoline; 20Million litres of Kerosene, Nine Million litres of Diesel and others.

The construction has taken a while and has been though the most excruciating economic challenges Nigeria has ever faced. Would Dangote Industries have delivered this project much earlier if it had awarded it to a world-class EPC contractor like Bechtel, TechnipFMC, Siemens, KBR?

“Yes”, said Alex Ogedengbe, a retired Group Executive Director (GED) at the NNPC, who was involved in the construction of the Warri and Port Harcourt Refineries in the 1980s. “There are just about six or seven such EPC contractors in the world”, he explained. Mr. Ogedengbe was speaking at a private webinar, organized by oil and gas analyst Ronke Onodeko, in April 2020.

Dangote sources maintain that the cost would have been at least 30% higher if that route had been taken. And while it could be argued that Dangote Industries could have had good value for money if a Bechtel or a KBR had handled the construction, multiple sources argue that the delay could have been minimized if the current structure had been in place since inception. The company went into this project with the mindset of constructing a cement plant, which was its major competence before this huge assignment. “We wasted the most time at the engineering stage”, one manager recalls. “A reputable EPC contractor would still have hired expertise from outside like we are doing and subcontract several units. Dangote Industries bought brand new equipment for this work; an EPC contractor might not even have done that, but it would have coordinated things better at the outset”.

One more advantage of building it yourself: all the equipment you purchase for logistics and construction purposes are yours.

Everyone we spoke to agreed that things began to take very good shape when Giuseppe Surace came along. The Italian engineer who had been Chief Executive of Saipem in Nigeria and Brazil, joined the project in June 2017 as Chief Operating Officer. “On the factory floors, in the executive offices, everywhere on site, the consensus is that one of the best decisions that Aliko Dangote made was Surace’s appointment”, said our sources. “He saved the project”.

A highlight of the swirling speculations around President Buhari’s impending visit is the description of how crude oil will be pumped into the refinery. One widely circulated message confidently talks of a “large sub-sea pipeline infrastructure connected to Oil and Gas blocks in the Niger Delta region for supply of crude feedstock”.

That’s a false narrative.

The truth is that Single Point Mooring s (SPM) buoys will play a huge role in input crude delivery and output petroleum products. There are three of them either way. Three SPMs will deliver the input crude oil from vessels into a jetty from which it is pumped into the plant. And three SPMs will ferry petroleum products out to vessels on the sea for export. “We have facility to evacuate through roads, we have a large loading capacity (103 loading terminals) and we can evacuate 75% of our production through road and we can also evacuate 75% of our production through the sea so that if we want to export”, Dangote officials have repeatedly explained.

“Within Nigeria we can evacuate to Warri, Port Harcourt, Calabar and so on, those options are available”, the officials say.

 

On the table is the idea of a six-lane road through Epe, a town in the east of Lagos. But what of the supply of the product to Lagos? Will some of it be through the Lekki Expressway?  The subject of the quality of Nigerian roads to take in the products, through land tankers, is still a fraught one.


ENI’s Biorefineries: Africa Will Again Provide the Raw Feedstock, And Miss the Processing Opportunity

By Toyin Akinosho, Publisher, in Lagos

Italian major ENI has initialed agreements with a string of African governments: to collect feedstock of vegetable oil and other agricultural wastes and residue all over the continent. The ostensible purpose is to establish a wide range of feedstock sources that do not compete with food cycles, “to be transformed into bio-fuels and bio-products that might contribute to feed ENI’s bio-refineries”.

In a standard throwback to centuries- long relationship between Europe and Africa, the company will gather these agricultural materials in Cote d’Ivoire, Kenya and Rwanda and process the entire stock, in Biorefineries established outside the continent.

The engineering skills, the manufacturing know how, the project management capacity, which come with converting the raw into processed products, will elude Africa.

As part of its “New Energy Solution” as it transits from the fossil fuel landscape, ENI wants to achieve Biorefinery capacity at over 5Million tonnes per Annum (5MMTPA) from 2030. But none of the refining will happen in Africa, where most of the raw material (feedstock) will be obtained from.

Africans will gather the agricultural wastes, on the pretext that ENI is helping the continent “to regenerate abandoned and degraded lands and promoting sustainable practices, to produce crops to be used as feedstock and create value out of material” that would otherwise have been left to rot and aggravate the environmental eye sores and health hazards, but the real value add-higher level skill sets fostered by the engineering of conversion, will be determined elsewhere.

It is like farming cocoa in abundance in Africa and producing chocolate in Europe all over again. But none of the African leaders who signed the deals to provide the feedstock is on record as having said anything about looking forward to developing Biorefineries in their countries.

In October 2022, a first cargo of vegetable oil, produced at ENI’s MakuENI agri-hub in Kenya, was shipped to the ENI’s biorefinery in Gela, Italy. This renewable feedstock will be used in the manufacturing of biofuels, “respecting all applicable standards of sustainability and the circular economy by repurposing abandoned land and by favorably contributing to local job creation and development. Production of such sustainable oil is expected to scale up rapidly to 20,000 tonnes by 2023”, ENI declares in its 2022 annual report. “This project marks the start of ENI’s innovative -5- model of vertically integrating its agri-business with its biorefineries, which will be replicated in a network incorporating other African countries”, the report highlights.

In the same month, ENI completed the phase-out of palm oil as feedstock supply for ENI’s biorefineries, with it fully replaced by sustainable raw materials from Africa. The company also launched a study to assess the economic feasibility of building and operating a biorefinery at the Livorno hub (also in Italy, several thousand kilometres from Africa), with a design capacity of 500 kilotonnes/annum.

In November 2022, ENI signed several agreements with the Government of Rwanda “to promote high-quality seed production suitable for agri-feedstock, for the production of biofuel in ENI’s biorefinery”.

ENI is in the process of searching for biorefinery sites all over the world, anywhere but Africa.

In December 2022, the company started a collaboration with Euglena, a leading Japanese biotechnology firm, and Petronas, Malaysia state-owned oil company, to evaluate the economic feasibility of building and operating a biorefinery complex in the South-Eastern Asian country. An investment decision is expected to be reached by 2023 with possible completion in 2025 and a targeted processing capacity of up to 650 ktonnes/y of bio-feedstock. The project will leverage the Honeywell UOP’s EcofiningTM process technology, which was jointly developed by ENI and Honeywell UOP.

In December 2022, Versalis acquired from DSM a technology to produce enzymes for second-generation ethanol to be employed at the Crescentino plant to integrate the proprietary Proesa® technology to deliver sustainable bioethanol and chemical products from lignocellulosic biomass.

ENI keeps looking all over the world for suitable sites for converting wastes it collects from Africa, into high value product. “As part of the development of the biorefining business, ENI signed definitive agreements with PBF to partner in a 50-50 joint venture, St. Bernard Renewables LLC (SBR), for the biorefinery currently under construction in Louisiana (US). The biorefinery start-up is expected in the first half of 2023, with a target processing capacity of about 1.1 million tonnes/year of raw materials to produce mainly HVO Diesel”.


The Refining Gap Closes, Inch by Inch/Our Latest Issue

It seems such a long time ago now that Angola and South Africa presented the cases for large scale refinery investment, in their respective countries, at the World Petroleum Congress in Johannesburg.

South Africa, host of the 2005 event, was the flavour of the month at the time; 11 years after its first democratic elections. Angola was on a full throttle, with first oil from the first of its several, newly discovered, deepwater fields, gushing out, increasing its output to historic highs.

The former, through PetroSA, announced plans for Project Mthombo: a 400,000Barrels Per Stream Day (BPSD) refinery slated to be located in the Coega Industrial Development Zone near Port Elizabeth in the Eastern Cape. The latter, through Sonangol,  informed the delegates about progress on a planned 200,000BPSD plant, scheduled for installation in Lobito, at a cost of $2Billion-$3Billion. Some 50%-60% of the Lobito plant was envisaged to be owned by foreign investors, with (state hydrocarbon firm) Sonangol allocated the remaining 40%.

18 years later, the South African dream has been crumpled by the procrastination of the state. But Angola has pushed on, continuing to figure a way out and in the next 24 months, it will have over 75,000BPSD addition to its in-country refining capacity.

The “building”, as they say, “is taking shape”.

Nine years ago, Aliko Dangote, a private entity, announced the decision to construct a 650,000BPD refinery, larger than the sizes of the Lobito and Mbotho refineries combined. And everyone, it seems, is now complaining that the mammoth facility is not yet completed. We haven’t even given him due credit for delivering a 1Million Tonne Per Annum (1MMTPA) fertilizer complex, mopping up 180MMscf/d of Nigerian gas, en route to commissioning of the refinery.

The refining boom has come a tad late for the continent. It is 20 years to the end of the fossil fuel era. But the struggle, as they say, continues.

Welcome to the REFINING GAP ANNUAL 2023, our tenth yearly look at refining opportunities.

Our special story in this issue is on the mini-refining landscape, titled: Nigeria: Thinking Big about Small Things. Read it here.

The Africa Oil+Gas Report is the primer of the hydrocarbon industry on the continent. It is the market leader in local contextualizing of global developments and policy issues and is the go-to medium for international corporations, local entrepreneurs, technical enterprises or financing institutions, for useful analyses of Africa’s oil and gas industry. It has been published by the Festac News Press Limited since November 2001, and since the COVID 19 season, as a monthly digital (pdf) publication, emailed to subscribers around the world. Its website remains www.africaoilgasreport.com and the contact email address is info@africaoilgasreport.com. Contact telephone numbers in our West African regional headquarters in Lagos are  +2347062420127, +2348036525979, +2348023902519.


NDEP Doubles its Refining Output in Ogbele

Niger Delta Exploration & Production (NDEP) Plc, produced 152.84Million litres of diesel, kerosene, high pour fuel oil and naphtha from its three -phase refinery in 2022.

Nigeria’s best ranked indigenous E&P firm doubled its output of petroleum products for the second consecutive year: 2022’s was 105% increase on 2021’s 74.53Million litres. That itself was double the output of 37Million litres in 2020.

“The refinery was the focal point for the company’s realising value in 2022”, says Gbite Falade, the company’s Chief Executive Officer.

The surge in production was extracted in a severely challenging business environment. As crude oil export dropped as a result of the outage of the Trans Niger Pipeline, NDEP proceeded to debottleneck the refinery production from upstream oil production, pumping in more crude into its 11,000Barrel Per Stream Day refinery complex. “Capacity utilisation improved to 24.0% from 13.45% in 2021; underscoring further upside potential as well as additional opportunities that exist to further optimise the refinery business”, Falade says in an update.

But there are back end stories to these figures.

One is about Naptha, a product which wasn’t sold on its own. Until 2022, it had always been spiked into the crude stream and exported. But the nine-month long outage of the TransNiger Pipeline in 2022 meant that there was no market for the Naptha as it is not in demand in Nigeria. “We had to work with regulators and standards agencies, for the licencing for storage and export of Naptha, satisfying very stringent requirements”, Falade explains.

In the event the company has one more petroleum product, outside of raw crude and gas, that is a foreign exchange income earner.

NDEP’s refining growth is set against the background of the unproven nature of the crude oil refining landscape.

Unlike upstream work, which teems with activity and skills that can be hired round the corner, the refining landscape lacks a robust technical workforce.

State owned NNPC, with combined nameplate capacity of 445000BPSD, has been the only warehouse of refining skills in the country, but it has been chronically inefficient and hasn’t produced anywhere close to 15% of its capacity in 15 years. “Local support from a technical and operational point of view is lacking”, Falade says. Which is why the company has always had to bring in Original Equipment Manufacturers (OEM) personnel to ‘put out fires’, in a manner of speaking. The company has been investing in upskilling and ensuring that OEM personnel adequately pass on the skills.

Other challenges have tested the capacity to deliver.

Falade recalls the vigorous work of lowering the pour point of the High Pour Fuel Oil, one of the refinery’s top revenue earners. “At atmospheric pressure, the product was congealing, such that offtake was complicated”, he explains. He is happy to conclude that the resolution of every one of these complications has aided the improvement of the refining ecosystem. “There’s a curve we are passing which anyone who comes after us would not need to navigate”.


Edo (ERPC), Nigeria’s Third Functional, Privately Owned Refinery, Receives Crude Feedstock from Oza

Decklar Resources has announced the receipt of payment for the delivery of 10,000Barrels of crude oil to AIPCC owned refinery, which it initially described as “a small crude oil refinery in Edo State, Nigeria”.

“Trucking of oil has continued from the Oza Field to the Edo Refinery and Petrochemicals Company Limited (ERPC) in Edo State, Nigeria”, Decklar, a Canadian producer of Nigerian marginal oil fields, disclosed.

ERPC is a 6,000 barrels per day modular refinery, executed in two trains of 1,000BPSD; and 5,000BPSD, “and has been commissioned and is fully operational”, its owners say. “The refined products sold are Diesel, Naphtha and Low Pour Fuel Oil (LPFO)”.

ERPC is the third, fully commissioned, legitimate modular refinery with clear line of sight to feedstock in Nigeria,  after the Niger Delta E&P owned 11,000BSPD refinery on the Ogbele field in Rivers State and Waltersmith Petroman  owned 5,000BSPD in Ibigwe, Imo State.

Decklar says it has, in conjunction with partner Millenium, have issued another invoice for delivery of 5,000 barrels of crude oil (bbls) to ERPC “under the recently signed 30,000 Barrels crude sale agreement., “and initial payment for previous deliveries totaling 10,000 bbls has now been received.

Edo Refinery statement notes that work on the Phase 2 (15,000BPSD) has already commenced, with full operations slated to start in March 2023.

 

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