All posts tagged refining gap

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.

GEOPLEX: ‘We Are Early Movers in the New Marginal Field Development’

As part of our C-Suite Series of interviews with active leaders in Africa’s energy space, Africa Oil+Gas Report engaged WOLE OGUNSANYA, Geoplex’s founder and Chief Executive, in a long conversation. The company has taken substantial interest in a marginal field offshore Nigeria. That’s where the discussion began.

Below, Paul Kelechi Akpelu summarises the chat:

Now that you have acquired equity interest in a marginal oil field, tell us about your journey as an E&P independent; your proposition as an oilfield operator…

We have interest in one marginal oil field, which is the Indibe field. We did not go forward with the second field that we had interest in, because of the result of our evaluation. We were awarded that second field (during the bid round) but the Net Present Value (NPV) and the (development) requirements of that field didn’t look very good. So, we replied back to the Nigerian Upstream Regulatory Commission (NUPRC), to let them understand that it was too much of a burden for a small company like us to take on. But with Indibe, yes, we are part owners of Indibe because we farmed into it and we Have finished drawing up our field development programme. We actually had to take on Baker Hughes to do all these studies for us to make sure that if we invest more in this field, what we think is there, what the prognosis says will make economic sense. So, we’re into that and most likely sometimes in mid to late 2023 we will be drilling the Indibe field.

They ran double completion inside a seven-inch pipe with gas lift… and the whole thing jammed up. The well was finished. But we cut those tubings eleven times and picked them out like spaghetti to salvage that well. This is how passionate we are because this is a Nigerian thing

When should we expect First Oil?

We have been engaging with the NUPRC , reviewing all of the regulations in place that we have to meet. Part of it requires that you have your facility ready and we are offshore. This asset is in OML 67 which is owned by ExxonMobil. With the regulations that we have and the meetings that we have had with the NUPRC, they are going to allow us do what is called Extended Well Testing. It allows you test the well over a number of days and the volume, temperature, and pressure information that you gather will be used to determine or predict the production that you would have over say five to ten years. And of course, when you are doing that, you can keep and monetise the production you had during the extended well test period. That is the way we are intending to get to First Oil hopefully in 2023.

What are the maximum allowable days you could do an extended well test?

The law allows 90 days for extended well test and a one-time renewal of another 90 days.

In the past, some companies have essentially used extended well tests to produce and over the course of say two years, they keep saying they are doing extended well test.

NUPRC is focused to help us, including getting support from the multinational company that owns the OML where these fields are to deliver value. If you put in $20Million to drill a well and complete it; if you are efficient, your ability to flow that well even at a 1,000 BOPD for 90 days helps everybody. It helps you to generate some revenue and it helps you to raise finance because the banks now understand that the oil is there and that the well is completed. If you are lucky to get a renewal, after another 90 days you already have certain level of cash flow and you shut in that well and come back in another six months with the permanent facility, it makes sense. That is what the government wants, for us to get more volumes out of the ground.

There is a lot of gas in Indibe. What are you going to do with that? For a new company like yours, gas could be a bit of a challenge.

We are aware of that and we are working very closely with ExxonMobil on how to handle the gas production. There is also the Ibom Power opportunity in [that sector] and a number of people that will offtake gas in Eked. We are hoping we will offtake with ExxonMobil because it is in their field. If we are able to put the infrastructure in place and get NGL [to offtake], we could consider that for a good price as far monetising is concerned. All that gas monetisation issues we have to [solve] otherwise the project will not be viable.

Geoplex has an interest in the FPSO business and you have equity shareholding with Yinson Holding. Is Yinson Operations & Production West Africa Ltd(YOPWAL)- looking at any opportunities outside Nigeria at the moment?

Yes, we are the partner for Yinson in the country at the moment and there’s a number of FPSOs that we operate. The uptime of our FPSOs, how many days our FPSO was running without any shut down is probably the highest in the world. The FPSO partnership that we’re running with Yinson is strictly in Nigeria. Geoplex is the majority owner of the local company [but] there are other opportunities that they have within sub-Sahara Africa that could be an advantage to Geoplex and we could partake in future.

What we have with YOPWAL is strictly a relationship for Nigeria and of course in Nigeria, we’re looking for further opportunities.

Will YOPWAL  provide the FPSO for Amni’s Tubu Field?

I am not aware of that. What I can tell you without mentioning any names is that we’re looking at another client that has solicited us to provide FPSO for them based on our record that they are aware of. It is important that that end of the spectrum is handled at the highest competency level and that is what we have been able to do with Yinson.

The Nigerian  National Content Development & Monitoring Board (NCDMB) is worried that local companies like yours do not invest in research and development. What’s your take sir?

In Geoplex, we do a number of research, local simulations and we document them. This is deliberate because we have the local know how that helps us in some of our services to deliver better than the multinationals and that’s where we actually are today. There are some services that Geoplex can do better in Nigeria than any multinational company.

If you don’t build capacity, if you don’t invest in equipment, if you don’t train people, if you don’t develop, you cannot do research. There would be nothing for you to research because for you to do research, you must have certain level of know-how and what you’re doing in research is expanding that know-how in a scientific manner. It is important for indigenous companies to build our capacity to that level that we can do a lot of research within the country. In Geoplex, we’re already doing a few things in our own way. We have a test well in Port Harcourt where we simulate operations and have records that help us when we’re going to the well site to deliver those services as good as anybody in the world.

Why did you decide on acquiring a fleet of rigs, and becoming a drilling rig investor?

So that we derive value across the value chain of oil and gas services in Nigeria. It’s not the first time we will expand our portfolio of services, drilling rig is just one of them. We started as a monolithic service company providing electric wireline services, [then] we rolled into many other services: MWD, LWD, coil tubing, cementing, slake line, surface well testing and even completion. So the rigs are just one of the other services  [and] we have capacity to deliver turnkey projects on land.

One of the clients for whom we delivered turnkey projects, made a presentation at the conference of the Nigerian Association of Petroleum Explorationists (NAPE)  and declared that turnkey service is the path that Nigeria’s small field operators should be traveling  because it saves them cost, it is more efficient and it avoids a long supply chain process. This client had raised production to more than two times of what they previously had and the job we did for them, we did  within budget. If an E&P company chooses to set up a supply chain to drill one well [on its own], it supply chain department will award 33 contracts. That’s how many contracts you need to deliver that well. So you can imagine the efficiency or lack of in that system.

We are saying look, we have the rig, we have the services and here’s our international partner. We deliver this core value at double digits lower percentage than you will if you do it yourself.

We delivered in joint venture with one of our multinational partners but Geoplex rigs drilled the wells and Geoplex equipment did some of the services such as coiled tubing,  cementing and so on. We supplied all the long lead items like the pipes, the well head and installed all of that. Our partner, the international company, also carried out some of those services to deliver those wells. So, it was a turnkey JV project that we delivered.

 Who are your international partners?

We work with all the international companies in Nigeria. In the oil and gas service space, there are some technologies, some know-how that some indigenous companies have not attained, including us. The local content Act of 2010, is to ensure that we increase capacity, [but] it will take time to be there, 100 percent.

What’s your general idea of the rate of return on your investment?

The rig business is cyclical. When the price of oil is good, most oil companies in Nigeria would want to drill and get more oil but in other countries, it is really done the other way around; they drill when the price of oil is cheap because the services will be cheap from the service companies. There is nothing wrong when the prices are $80 or $90 and I drill a few more wells to get more oil because even if I’m paying a little bit more for the services, I’m also selling my oil at a reasonable price. The only thing is that because the rigs are more expensive in terms of servicing and maintenance, when the upside is there, you have to take advantage of it. When the downside comes, that depends on how you prepare yourself for that.

In Geoplex, we have learnt to take advantage of the upside and preserve ourselves on the other side. When our rig is working, the business is very profitable. Right now, we have a number of contracts that these rigs are already lined up for, apart from the work that we’re just completing.

When you deploy one of your rigs to Asa field, will it be a multi-well campaign, and how many wells are you looking at drilling and what is the time frame?

On that one, since we’ve not heard anything from the client. [But on another], we are mobilizing our 3,000-horsepower rig to Shell. Preparing a rig can take 2-3 months. The Shell contract is a contract that we have and we have signed off on. The 3,000-horsepower rig can drill a very extended well, meaning we can drill both horizontal wells and extended wells with it. When you have the spec of the rig, 1,500hp, 2,000hp or 3,000hp, it just tells you how much they can pull and the deeper you go the more you need to pull that pipe back. So, With Shell, we got this two years contract plus a possibility of one year extension and they needed that rig because they’re going for deeper wells. There are only two of those rigs in the country and we own one of them.

Baker Hughes is known, for example, for making tools for the industry. Do you envisage several Nigerian companies manufacturing a range of oilfield tools?

That’s happening today. There are actually companies that are already doing that when it comes to mechanical equipment. Even in Geoplex, we design stuff, we design crossovers and we go to machine shops in Nigeria and make them. On other high-level technology, there is not a lot going on in Nigeria yet but it is not impossible. What will make them happen [is] that you have to have a certain know how and that you must developed to a certain level, then with a little bit of research, you can raise the bar. Even Baker or Schlumberger don’t build those tools, they design them.

The beauty of the world supply chain systems is, when you do your designs, there are patents and there are agreements so that whoever you are outsourcing your design components to or the equipment that you are building are bound by that agreement. At Geoplex, we are partnering with a UAE company for some specific downhole tools, to integrate some of our equipment so that instead of having a 40ft length of equipment, we can reduce that to 10ft. In oil and gas industry, the more things you put in the well the more risk you are exposing that well to by introducing lots of junk in it all of that.

Which companies are utilising GEOPLEX’s subsurface service the most?

We’re working for everybody. We work a lot for Seplat, NDEP, (as I speak with you our team are there helping them complete a well that they are drilling right now),  Heirs Holdings. We work for Waltersmith and we are preparing to support them with some remedial work that they have with their well and we also work for Midwestern. For the multinationals, as I am speaking with you, we have more than four crews in Chevron right now, with Shell, we also have people out there working and we are preparing our rigs for them. We recently finished the work we have with ExxonMobil but we are still working for TOTALEnergies. 

If you acquire equipment, it ties down funds when nothing is happening, but you say there is a need to have that equipment yourself

Halliburton, Baker Hughes and Schlumberger have been doing this for 95 years now.  The way they have succeeded is to develop and own equipment. Of course, it is not easy to own equipment and have that equipment not put to use all the time in delivering those services for which they were bought. To compound the issue, you borrowed money to buy them and if they don’t work you don’t make the money and you need to service that debt. But if you plan and structure yourself properly, there is no other way to survive in this industry without owning equipment. The local content law was established for us to build capacity and have capacity within country to produce our oil and gas. If you don’t have equipment, you are not building capacity.

As a service provider, who your worst offenders are in terms of payments and how frustrating is it before you get your money?

People are owing us quite a lot and it is very painful because when you have debts that run into tens of millions of dollars, it doesn’t matter how strong you are because even the multinational partners that we work with, when we are not paying, they too are feeling the pain. We are always in conversation with them on how we can get the end client to pay us. We are hopeful that the PIA will help solve that though.

You had a joint bid with Baker Hughes in Angola recently, how did it go?

They were the ones that bid and asked us to support them. We are in conversation with them right now on how we can mobilise our equipment and personnel from Nigeria to go and support those operations.

How is your interest in bitumen going and what are the challenges with that?

We were invited for the bitumen opportunity, it wasn’t something that we had in our schedule. We are working with one or two state governments to see how we can support them to exploit the bitumen that they have in their states. We are at the bid round stage right now and this exercise is conducted by the Ministry of Mines and Solid Minerals Development.

This country imports about $300Million worth of bitumen every year. To exploit bitumen, you have to drill. Because it is on land and Geoplex owns land rigs, we have a major capacity to exploit bitumen. The other capacities that would be required would likely include a lot of surface processing and we have a foreign partner that can support us. So, it is for purely economic reasons and purely national reasons that we think, if we can invest in bitumen exploitation in Nigeria and make money out of it and at the same time reduce the money, we spend to import that material into the country.

Are you working with the power sector too?

We are working with the Transmission Company of Nigeria (TCN) to support some of the electricity distribution companies to upgrade their distribution capacity. This will involve building sub-stations and we already have the contract to do that and we are involved in working with them right now to see how we can place orders for some of the materials. We think we can leverage our engineering know how, our discipline, and our approach to business to make this a success.

Are you working with TCN as an enabler to them?

No as a contractor. There are three distribution companies that we are going to work with to help upgrade their distribution network.

Is that part of the Presidential Power Initiative, aka Siemens project?

No, this is a completely different arrangement that TCN made. Nigeria’s installed capacity is about 12,000MW but the production capacity is no more than 6-7,000MW because of gas availability issue. Also, within that production capacity, we could barely maintain 4,000MW. Part of the problem is caused by the distribution network because it is not robust enough to [deliver] what we are producing. As the generating companies are ramping up production, they are not able to have it distributed through the national grid and down to the end users through the sub-stations. So TCN designed a programme with the CBN and we are one of the lucky ones to win that contract.

There’s talk that Geoplex plans natural gas supply to some projects in Southwest Nigeria

We are not supplying gas. We have a growing interest in embedded power. The power sector regulations allow you to have embedded power, which means that the distribution companies [discos] can by themselves or in partnership with others, generate power within their disco network and I think the maximum power they can generate as embedded power is 10,000MW. If the national grid is not able to supply you enough power and you have your own embedded power, you would need less from the national grid. It is all about having more because we do not have enough power as a nation. Geoplex is interested in embedded power with one of the discos. We have done a lot of engineering work; feasibility studies and we have even identified the kind of turbines that we will need and the capacity that we are going to build within this disco network. We are in talks right now with the disco and we are going to site it along one of the gas routes that we have across the country.

We are working on an agreement with the Nigerian Gas Company to tap into their gas supply area in the Southwest of the country. The power that some of these big factories are using is enough to power half of Victoria Island, (an upmarket, mix residential and office suburb of Lagos). So, if I have property in VI  and there is a gas pipeline in the vicinity and I buy a piece of land along that route and secure it, go to the water front and put my micro turbine in there and hook it up to the network, VI has constant power.

Your 13 years at Schlumberger is relatively a short time. What was the trigger for you to leave?

When I joined Schlumberger, I think we were 16 in our training school and probably half didn’t make that training school and before I left, we were probably just two left in the company after 12 years. The job was extremely difficult and the attrition rate was high. Some of us had the attitude that we were going to do our job to the best of our abilities and we did. But we also thought, if they are going to ask us to go, then we were prepared to go. And of course, there was also some rule changes when I was 12 years in the company which might affect your pension. If you left at a certain time, you got a lot of money. if you left at a certain window, you didn’t get pension at all until you are 50 or 55 years old.

NNPC had formed a local content policy, the NOGIC Act of 2010. That was visionary for the national interest and the industry interest to have Nigerians carrying out these services. I got aware of it and said well, if they are going to give me the job, I am already doing it here for Schlumberger. I already manage people and I work in different countries and I have trained a lot of people. So, if the Nigerian government decided to give me this job, I was very confident that I would deliver on it. That was actually the catalyst for me to leave.


Where do you see the oil industry in the future?

Foreign subsurface service operators charge that companies like yours are pushing them out of the market.

When we were colonised by the British, they came with their cars but Nigerians did not know how to drive. So, the Britons drove the cars. Now imagine if we still don’t know how to drive today. There is going to be a time when those multinationals will not want to work in this country and that time is not going to be decided in one day; it is going to be transitioned. That is the whole purpose of the Local Content policy, to develop capacity. So, what I see is a value chain plain where we are creating value for ourselves as Nigerians and we are not pushing any multinationals out. There is a niche, there is a value space for these multinational service companies to be part of this industry and we are doing it with our partners and they are partnering more with us because they have seen that working with us also gives them value that is better than they working by themselves.

You don’t think that Schlumberger would be saying:” these guys are trying to take our job”s?

We think we can leverage our engineering know how, our discipline, and our approach to business-in the oil industry to make a success of our foray into electricity distribution sector

We work with Schlumberger and everybody else. In fact, our first partnership in the industry was with Schlumberger in electric wireline. The first contract we had with Shell was with Baker but since then we have always worked with Schlumberger on electric wireline.

In the oil and gas space, because of who we are and because of our integrity, many of them want to work with us. We partnered with Halliburton and they sold us their bulk cement plant in Escravos. Geoplex is the only Nigerian company that can do cement job in Escravos today because of the capacity that we have built. Halliburton is still partnering with us and their senior vice president has come and we have put an agreement in place. They see that there is an interest to work with Geoplex. So, it is not just with Baker, Schlumberger or Halliburton, we are also working with Weatherford in some areas. The whole purpose is that you have to ensure that your partner has a space in the value chain and you have to have the integrity that is required and the due diligence that the multinational companies are very strong about because of the laws in their home countries that cannot be violated.



‘Based on your CAPEX Performance, NUPRC May Ask You to Drill or Drop’

Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), spoke exclusively 
to Africa Oil+ Gas Report’s Toyin Akinosho, on a range of issues, focused on increasing the country’s hydrocarbon output.

Excerpts from the conversation…

AOGR: The NUPRC has been reported as holding new licence awardees by the hand and brokering relationships between them and financiers and suppliers and offtakers. That’s a unique engagement in the annals of the industry. How is that coming?

Commission CE: The NUPRC is putting the government’s reputation on the line in asking banks and service providers to support marginal field operators, hence the regulator wants to ensure that the companies involved in the engagements have their corporate governance framework in place before it introduces them to third parties. .Awardees Will Be Helped to Meld their Corporate Governance Framework.

The commission has midwifed the unity of the multiple awardees in each SPV, and encouraged the pulling together of funds.  We brought them together through Petroleum Prospecting Licence (PPL) but development fund needs to be sourced jointly.  Otherwise, weak ones will need to go into carry agreement voluntarily,

If funders don’t see a United front; they will be less compelled to engage he That’s why the commission developed a corporate governance framework for upstream petroleum operations currently at an advanced stage of internal review and stakeholder engagements required for its finalization.

You addressed this issue online at Schlumberger’s 70th Anniversary ….

I took the opportunity of my online address to Schlumberger’s 70th Year Anniversary Parley in Nigeria to ask the company to get on board and participate in services for newly awarded marginal fields. I was asking them to get involved in some sort of pre-export financing. As service providers, they get settled through the crude proceeds.

Schlumberger responded that they don’t do two things: 1) They don’t take equity for services (2) they don’t do commodity. I told them I appreciated the feedback and believe there is room for partnership.

Now, if they (Schlumberger) are not in the business of commodity, who is. We’d talk to Vitol, we’d talk to Trafigura. We’d get everyone around to the table. I worked with commodity traders at the time I headed the NNPC’s Crude Marketing Unit, we bring our legal background, our commercial background to the table. The lesson here is that a regulator must be multi-disciplinary.

Mini Deepwater Bid Round Terminal Date -34 companies, including four oil majors, are prequalified for the ongoing bid round for seven deepwater acreages. The bid round was inaugurated in January 2023 and the final awards were expected to be announced latest by end of April 2023

That terminal date is no longer cast in stone: We work with feedbacks and we are on an ongoing conversation with stakeholders. The Bid round was not timed to end before the exit date of the outgoing administration. There is no transition in the PIA. What the PIA says is that there should be bid rounds. If we get to a point today that we are sure that everything is going smoothly with the awardees of the last bid round, we will put out notice for another round and open the market. Let me repeat this for emphasis: We are not doing this bid round around the political transition.

There are industrywide misgivings about several operators (especially Nigerian independents)  not sweating their assets and as such contributing to dwindling output

 The commission will take operatorship of E&P assets seriously as it determines addition or subtraction to the output of hydrocarbons. We will ask companies to upload their financials on dedicated portals for economic regulation. We will discourage keeping assets stranded in our regulatory focus to optimize oil and gas production through enforcement of the drill or drop provisions of the PIA. Let us know your CAPEX on E&P projects. The PIA allows the regulator to make such an instruction. It enables the commission to measure a company’s financial viability. We want to know what Companies have committed to their assets as CAPEX.

Editor’s note: President Muhammadu Buhari approved the amendment of Deep Offshore Oil block Bid Round calendar after this interview had taken place. The president made the approval in his capacity as the Petroleum Resources Minister.

The NUPRC explained, in a statement, that the move was to accommodate the concerns expressed by both local and international investors over the closeness of the schedule to the terminal date of the present administration in the country. 

The deadline for the submission of Technical/Commercial bids was extended to May 19, 2023. The timeline for concluding activities of contract negotiations and signing is now between July 3 and 28, 2023. The outstanding activities for the conclusion of the exercise include the Technical/Commercial Bid Submission and the Ministerial Consent/Contract Negotiation and Signing. The technical/commercial bid submission involves data access, purchase, evaluation, bid preparation and submission; bid evaluation and publication of results as well as commercial bid conference and announcement of winners,” he added.

The NUPRC statement reiterated that the commission was fully committed to conducting the bid round in a manner that guarantees the achievement of the objectives of the exercise, pointing out that participation is both robust and beneficial to key stakeholders.   

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 and the contact email address is 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.


Algeria Reduces Import of Petroleum Products by 70%

Algeria imported 254,741 Tons of Petroleum Products in 2021, compared with 858,939 Tons in 2020, a significant drop of 70%.

“This decrease is explained by the improvement in the local production of gasoline and diesel”, according to Sonatrach, the state hydrocarbon company. This improvement “led to a total stoppage of land fuel imports”, Sonatrach adds, in its latest report.

“The completion of the refinery rehabilitation programme and the improvement in production optimization, made it possible in 2021 to meet all of the demand for gasoline and diesel and stop importing them”, Sonatrach enthuses in its upbeat report.

Sonatrach says it completed the upgrade of its key refineries: Skikda, Arzew and Algiers; the revamp has taken the course of the last 10 years. But the major investment in refinery capacity increase in 2021 was completion work on the new Hassi Messaoud refinery-collocated with the old Hassi Messaoud refinery.

There was also a 7% drop in overall export of refined products, from 14.6Million Tonnes to 13.6Million Tonnes, an indication that Algerians consumed more petroleum products in country than they exported.

Angola Inaugurates Luanda Refinery Expansion

President Joao Lourenco has made increased hydrocarbon refining capacity a priority

Angola has inaugurated an extension unit on the Luanda refinery, which quadruples the production of petroleum products at the plant.

It Is the first of three ongoing refinery projects in the country.

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The project bumps up gasoline output from 100,000tons to 450,000 tons per year.

“The Combined Cycle has been rehabilitated so as to be fed by hydrogen produced by the new Platforming unit”, ENI says in a statement. “Power is now produced recycling gas with a net reduction of pollutant emissions”.

ENI and Sonangol signed a Memorandum of Understanding to give continuity to the support to expansion and modernization activities the refinery of Luanda.

“The main highlight is increasing the production capacity of refined petroleum products, such as diesel and gasoline. The situation in the country, which has significant crude oil production but until recently had little capacity to transform it, was somewhat incomprehensible,” Angolan President Joao Lourenco, said at the inauguration.

Angola produces only about 20% of the refined products it needs, despite being one of Africa’s top two crude oil producers.

President Joao Lourenco has made increased hydrocarbon refining capacity a priority. Construction of the 60,000BPSD refinery at Cabinda is ongoing, under a joint venture agreement with Sonangol, according to a report in the April 2022 edition of the Africa Oil+Gas Report.  “Phase 1 of that project is expected to include a 30,000BPSD CDU with a desalter, kerosene treatment and ancillary infrastructures including a conventional buoy mooring system, pipelines and storage facility for over 1.2Million barrels. It is due to be commissioned before the end of 2022. Phase 2 and 3 will upgrade the plant to a full conversion refinery with additional 30,000BPSD capacity, a new catalytic reformer, hydrotreater and catalytic cracking unit”, the report notes.

Also ongoing is the construction of the 100,000BPSD grassroots Soyo refinery in Zaire Province. The contract was won by the US company Quanten Consortium, in March 2021, under a Design, Build, Own, and Operate a tank farm and marine terminal for feedstock (including crude oil) delivered to and products exported from the refinery

Meanwhile, ENI said of the upgrade Luanda refinery: “The modernization and expansion project is based on a commitment taken by Eni with the Government of Angola, and leverages ENI’s know-how and expertise and its long cooperation with Sonangol. The project has had a positive impact in job generation and provided training opportunities for over 100 employees of Sonangol who benefitted from training by ENI in Milan, Sannazzaro, Livorno, Taranto and Luanda”.

Nigerian New Refinery Sits Idle as NNPC Wrings its Hands Over Feedstock Supply

By Jo Jackson Mthembu, in Asaba

The newly constructed 10,000Barrels Per Stream Day (BPSD) capacity Omsa Pillar Astex Company (OPAC) Refinery, located in Kwale, in Nigeria’s Delta State, has been unable get sufficient crude oil to refine as the company doesn’t operate its own oil producing field.

The refinery is sitting idle three months after the regulator signed off on its Licence to operate.

Planned products include Diesel (AGO), which is in high demand, Naptha, Kerosene and Fuel Oil.

OPAC is depending on crude supply from the state hydrocarbon company Nigerian National Petroleum Company (NNPC) Ltd, based on the government’s assurance to support modular refineries with feedstock, as documented in the Petroleum Industry Act (PIA).

OPAC and NNPC have been engaged in discussions since 2019 and OPAC has submitted documents to NNPC, for review.

NNPC officials had been expected to visit the refinery but they haven’t.

The question: Why the delay? Perhaps NNPC is wary of signing off 10,000Barrels of crude a day for payment in local currency Naira. Perhaps? NNPC sources declined to comment. NNPC officially, didn’t respond to inquiry from Africa Oil+Gas Report.

The facility has passed all reliability tests and won the approval of the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) after a refinery and an effective refinery commissioning exercise. It had been okayed to receive crude for refining and it has the approval to sell products, documents sighted by Africa Oil+Gas Report indicate.

Nigerian hydrocarbon companies, whether operating upstream or downstream, do not take on NNPC in public, so comments from companies who have challenges with NNPC are always difficult get on record.

OPAC is the first functional modular refinery without its main promoters being operators of a producing oilfield, serving as guaranteed feedstock even though it is strategically located close to the MIDWESTERN Crude/Gas Gathering Facility in Kwale, where a combined 30,000 Barrels of Oil Per Day (BOPD) is gathered from several marginal fields and sent to the Brass and Forcados terminals.

The two fully functioning modular refineries in the country, completed before OPAC, are the 11,000BSPD Ogbele Refinery, (owned by Niger Delta E&P) supplied by the Ogbele field and the 5,000BSPD Waltersmith Refining & Petrochemical facility (built by Waltersmith Petroman), primarily supplied by the Ibigwe field.

Indeed, the Walter Smith Refinery receives 2,000Barrels of crude every day from SEPLAT Energy operated Ohaji South field, nearby, as the Ibigwe field does not deliver up to 3,000BOPD of its own currently. In any case, the entire crude produced in SEPLATS’s Ohaji South (about 7,000BOPD)  is processed in a SEPLAT owned Early Production System (ELPS), sitting right inside the Ibigwe field Flow station, so there’s extremely beneficial relationship between SEPLAT Energy and Waltersmith.

OPAC has a contractual agreement


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