BusinessDay 06 Mar 2018

Tuesday 06 March 2018
BUSINESS DAY
Energy Report
C002D5556
31
Oil & Gas Power Renewables Environment
Nigeria records appreciable reduction in barrel of crude oil unit cost
Stories by Olusola Bello
The minister of
State for Petroleum
Resources,
Emmanuel Ibe
Kachikwu, has
said that the country has
recorded an appreciable
reduction in the unit cost of
a barrel of crude oil.
The minster, who did not
state by how much percent
the unit cost has lowered,
stated this in his key note
address at the Olobiri lecture
organised by the Nigerian
Society of Engineers in Abuja,
disclosing that necessary
steps have been taken to
lower the cost of production
The unit cost of a barrel
of crude oil in the Nigerian
oil and gas industry is one
of the costliest in the world
with the cost of a barrel going
as high as between $25
and $30.
The minister had been
advocating that a unit cost
of barrel should not be more
than $15 at most.
The reduction in the ac-
tivities of the Niger Delta
militants in the oil region
may have been responsible
for the lowering of the unit
cost of a barrel.
“Via our Big Win 5
(Transparency & Efficiency),
we have successfully implemented
necessary actions
that have lowered the unit
technical cost of production.
A specific example is
advocating for more collaboration
across the entire
value chain of our petroleum
industry; this has resulted
in elimination of duplicated
efforts. Costs decline due
to lesser capital that would
have initially being expended
in exerting single efforts,”
he said.
He also spoke about efforts
being made at making
the establishment of modular
refineries a reality. Modular
refinery he explained
has garnered tractions in the
country.
“Modular refineries have
also successfully garnered
traction, with already established
modular refinery
equipment on their way
to ports in the country .
Institutional investors are
portraying confidence in the
productive engagements we
have had with them in Niger
Delta,” he said.
According to the minister
the efforts in Big Win 2 (Business
Environment & Investment
Drive) on improving
our business environment
have yielded positive results;
as this has been able to attract
investors into the entire
value chain.
He said the assiduous
effort of the government towards
reviving the refineries
has resulted in an almostconcluded
process that
would stimulate the flow of
private investments into the
revamp the country’s three
refineries.
The minister who expressed
appreciation to the
association for its collaborative
efforts for pushing improved
transparency in the
operations of the oil and gas
industry said this concept
is of great importance in all
works of life. “Your inputs to
our policies and frameworks
are duly appreciated, as this
ensures all stakeholders
are considered in decisionmaking
processes.
The private and public
sector all work towards the
success stressing that the
collective efforts of all stakeholders
are what ensure
continuity of our sector.
“Our underlying agencies
are also undergoing constant
capacity development to
ensure our technical abilities
are apt.
This has contributed
towards our avoidance of
HSSE-negative Issues. The
costs associated with such
issues extend to the
Irreplaceable human
lives; it is imperative we
maintain our efforts”.
The Nigeria Oil and Gas
Industry mantra; the 7 Big
Wins, he said, has been able
to provide solutions to the
various problems identified
, with remnants that demand
longer timelines, being on
course to be achieved within
the specific timeline.
“ Our industry’s uniqueness
lies in the fact that although,
our ubiquity is never
questioned, our gains could
ultimately be losses. Everyone
uses petroleum, but not
everyone who produces it
is assured of quantifiable
profits”.
He said although policies
implemented by others
could impact on the
industry dynamics just as
the inherent risks vary, adding
that a nation’s ability to
adequately prepare for the
boom and bursts gives it
adequate leverage when the
market rollercoaster sets in.
Emmanuel Iheanacho,
Chairman, Integrated
Oil and Gas
Ltd., has appealed
to the Federal Government
has been urged to provide
funding and enabling environment
for entrepreneurs to
establish modular refineries,
to meet the nation’s refining
capacity.
Emmanuel Iheanacho,
chairman, Integrated Oil and
Gas Ltd and promoter of
20,000 Barrel Per Day (BPD)
production capacity of Eko
Refinery and Petrochemical,
made the appeal in Lagos.
He said the 250-million
dollar (N90 billion) modular
refinery at Tomaro Island
Port, Amuwo Odofin Local
Government Area, Lagos,
would be a hub for the refinery
industry.
Iheanacho, however, appealed
to the Federal Government
to come up with a policy
framework that will compel
financial institutions to make
funds available to indigenous
players who might intend to
Integrated oil seeks FG’s funding
support for modular refineries
build modular refineries.
He says that when the
20,000 bpd refinery comes on
stream it will address government’s
frequent importation
of refined petroleum products
into the country.
“Financial support is one
major area we need government’s
help, if government
realises that there is need to
have a lot of the small scale
refineries to turn around the
economy.
“We can now start exporting
more refined products
than we are currently importing.
“Government should
make provision for financing
because it is key requirement
to do 20,000 barrels per day.
“It requires an investment
of millions of dollars. We need
government to assist modular
refinery operators.
“We are not asking to be
given grants and handout but
to be assisted in the process of
being able to secure financing
in major finance institutions,”
he said.
Iheanacho also explained
that if government could assist
the operators to secure
finance, it would go a long
way to assist them realise
some of the benefits that
would drive the country’s
economic growth.
According to him, his 250
million dollars proposed refinery
will be a reference
point in Nigeria when completed.
He said the 20,000 refinery
was coming at a period when
stakeholders had faulted the
move by government to colocate
refineries, rather than
support holders of modular
refinery licences.
The Tomaro refinery he
said is expected to begin
production with Automated
Gas Oil (AGO) known as diesel,
Dual Purpose Kerosene
(DPK), export quality aviation
fuel, Naphta and fuel oil.
He explained that the
plant would be upgraded
to produce Premium Motor
Spirit (PMS) also known as
petrol, as operations progressed.
“The facility is designed
as one-stop shop comprising
refinery plant, storage
facility, flour mill, ship repair
yard, helipad for aviation operations
to offshore platforms
and resort centres”.he said.
He said the project would
also create massive employment
for the teeming youths
of the country.
The Chairman, said that
the detailed analysis of supporting
technologies and
engineering works at its $250
million (about N90 billion)
refinery has commenced.
He said that the 20,000bpd
crude oil refinery project site
at the Tomaro Industrial Park
and Free Trade Zone in Lagos
was designed to boost refining
capacity in the country.
According to him, the
United States Trade Development
Agency (USTDA) had
provided $797,343 as initial
funding for the take-off of
the Refinery project for its
detailed engineering design.
The grant is for feasibility
studies, supporting technologies
and development of an
implementation plan for a
modular refinery on Tomaro
Island in Lagos.
“The Eko Petrochemicals
and Refining Company selected
Texas-based VFuels,
LLC to advance the 20,000
barrels per day modular refinery.
Eko Disco gets Army support against energy
theft, vandalism and attack on officials
The campaign by Eko
Electricity Distribution
Company,
against energy theft,
vandalism of its equipment
and violent attack and harassment
of its staff has received
a big boost following promise
of support for the campaign
by the Nigerian Army.
Giving the promise of
support on behalf of the
army was the General Officer
Commanding (GOC)
81 Division of Nigerian
Army in Lagos, Major General
Enobong Okon Udoh
when the management of
Eko Disco led by the MD/
CEO of the company Adeoye
Fadeyibi paid him a
courtesy visit in his office
at Kofo Abayomi, Victoria
Island, Lagos.
According to Gen. Udoh,
though the responsibility
of protecting electricity
equipment and staff of
the distribution company
against violent attack and
harassment does not primarily
belong to the army,
the army could still support
the campaign by facilitating
synergy between the
company and other security
agencies especially
the Nigerian Security and
Civil Defence Corps and
the Nigerian Police.
Speaking further, Maj.
Gen. Udoh said although
EKEDC is now a private
company, the services it
renders is public oriented
adding that protecting
electricity facilities against
vandalism is for the socioeconomic
development of
the country and as such a
task to be taken serious by
all patriotic citizens.
Commenting on the debt
owed by the army in respect
of electricity bills, the army
chief said the army, not being
a profit generating outfit,
depends largely on funding
from the Federal Government
to meet its financial
obligation.
He further disclosed that
a committee to review electricity
bills owed by military
formations nationwide had
been set up and assured that
every debt owed by the armed
forces would eventually be
settled.
Major Gen. Udoh also
assured that EKDC officials
would be allowed free access
into the barracks to carry out
their official duties without
any fear of harassment or
molestation.
While advocating for bulk
metering of residential quarters
and offices within the
barracks, Maj Gen Udoh said
mammy markets and other
commercial concerns should
be supplied with pre-paid
meters to make operators of
such commercial ventures
pay for energy consumed.
Olusola Bello, Team lead, Analysts: Kelechi Ewuzie, Isaac Anyaogu, Graphics: Fifen Famous. Email: energyreport@businessdayonline.com, Tel: +234-8023020011; +234-7037817378; +234-8036534708