Interview ‘nigeria now depends almost 100 percent on importation of fuel’ – new dawn nigeria gaz 67b for sale


We see a big opportunity for a country that has a population of close to 200 million people, today. Our objective is producing and refining crude oil for the benefit of this huge population. We have a bulging population, we have crude oil and the only missing links is the inability to harness and process this crude oil. This is a huge investment opportunity. This in itself is an advantage. Remember, when you look at the Nigerian market, it does not comprise Nigeria alone – we are looking at all of these activities benefitting the entire West African sub-region.

So, when you measure the opportunities that are available to us, we are looking at Nigeria and the entire West African sub-region. power outage houston txu Whatever we do with the oil and gas we produce and add value to it through refining and petrochemical products, we know there is a huge market awaiting us. As a company, the opportunity is the motivation for us by the virtue of the market we see.

When you have a diversified portfolio as an oil company, you are able to mitigate risks. For example, if the oil price goes down, with your diversified portfolio of refining and petrochemical activities, you will cushion the effect in the downward pressure on oil price. If it goes up, well it is good for you. But we have had situations in the country where a downturn in oil price negatively impacts everything in the economy. This is part of our reason to build an integrated oil and gas company.

Our modular refinery is going to make available diesel and kerosene which is currently being imported into the country. No matter what people say about the inefficiency of a modular refinery, we are utilising what is available in this country and adding value to it to provide diesel, kerosene and H CFO which some industries utilise. Nigeria needs products, refined products. Despite the existence of 4 large-scale refineries, we depend almost 100 percent on imported products.

With our modular refinery project, Nigeria is going to have the first private sector-owned refinery by an oil producing company that is providing its own feedstock and operating it as efficiently as it has operated its upstream business. Apart from NDPR no other company in Nigeria is currently doing that. For us, our motivation is to add value to the crude oil we produce and this is a critical motivation for us and we are going to do this in a very efficient way. Our aspiration, which is why we have gone modular, is to add and progressively grow capacity.

We have started with 5, 000 barrels a day and we are going to add more modules that will take it to about 25,000 to 30,000 barrels a day. Our strategy is to take crude oil that we produce, that is close to us, put the plants very close to the source of the crude oil, refine it and distribute it within our area of operation. So, the critical issues that people refer to, we would have eliminated some of them.

Once we get this going, we will then improve on it by increasing the modules to about 30, 000 barrels a day and when we are able to do that, then the whole economics will begin to actually be more positive. We see this as a starting point despite the inefficiency that people claim exists in it. We have started and are positioning ourselves to be one of the pioneers of privately owned refineries in Nigeria. Despite the scepticism, I believe we have a business case. We are helping to solve some of Nigeria’s energy needs.

Not at all. We are looking at other third-party crude oil producers not too far from us. Our location is close to about 300 million barrels of oil in reserves sitting 30 km radius of where we are. gas unlimited houston texas This is our estimate. For most of this oil, the current strategy is to produce them, put them in pipelines for export. In the process, a number of things happen, you lose over 90 days due to the vandalisation of oil pipelines, so you are not able to produce and export that oil due to the vandalisation of oil pipelines. Secondly, you have a fixed transportation cost. The cost of transporting it from that area to Bonny terminal for export is $5 per barrel. On top of that, you are going to have 10 to 15 percent loss of oil due to crude oil theft.

When we run the numbers, we see an opportunity to build refining capacity of about 30, 000 barrels a day. When we do 30, 000 barrels a day we can access feedstock from all these oil assets around us and we will be a clear option for the producers instead of taking the oil to Bonny for export. We are going to target other sources of crude oil and third-party producers who are close to us; we take the crude from them, refine it and put the products in the domestic market. Of course, we will have to negotiate the price.

You see, that is why we started with the location of our modular refiner y. Let us look at the cost structure for producing and exporting oil from where we are. Just the cost of producing the oil, putting it in the line and exporting it is almost $ 8 per barrel. This is the transportation cost alone. This cost has been growing. We probably started at about $5 per barrel. So, if I produce crude and it is sold at $50 per barrel, you have to first remove $8. So by putting that refinery right in the field, where we produce the oil from or take oil from nearby fields, we have eliminated that $8 cost. This is a huge margin for us before we even do the refining.

It means that our refinery will buy crude unlike its competition, that is, the refineries that are out there buying at market price. Thus, we will negotiate with a number of crude oil producers around us. We can say to them, if you are spending $8 per barrel to export your crude, we can buy it at less $8 or $5. You are still keeping $3 in your pocket. So I am a viable option for you by the virtue of my location.

Our model is not premised on buying crude at the market price, because if we do that where we are, we will have significant pressure on our margins. We are a strategic refinery that is meeting two objectives: first is ensuring that crude producers get value for their crude production, they get real value. Second, through the refining itself, we make products available in the market.

We take advantage of our location to solve a problem for crude producers to improve our own refining margins. Ours is going to be a problem solving and value-adding refinery for the country. This will save Nigeria a lot of money too. The money that would have just gone away if you paid $8 per barrel to move your crude and somebody is putting an infrastructure in place to say instead of paying $8 per barrel, you pay $4 per barrel. We then go ahead, take the crude, refine it and put it in the market. This reduces the pressure on the foreign exchange also. Our model is strategic and will benefit all the parties involved.

This is why we believe we can continue to expand our module, notwithstanding the low volume and margins we are starting out with. We are confident that we will break even. One reason we started this is due to constant pipeline vandalisation and crude oil theft. The overall goal initially was to support our upstream business. This is what informed our investment decision. As we continued to refine the strategy, it became clear to us that there is a business opportunity here. We will grow our refining capacity and profitability as we solve operational problems associated with our E&P business and for other E&P companies around us. That is the whole idea.

It is just that we are operating an inefficient system, so to speak because of the subsidy issues in the market. Otherwise, product prices are a reflection of crude oil prices in an ideal market. Diesel that is deregulated today tracks the price of crude oil. e payment electricity bill bangalore It is only in PMS that you are not paying more because the government continues to subsidise it. So, at this stage, we do not have any concerns as such about oil price going up or down significantly. Diesel and kerosene are what we are mostly going to be putting out there. Their prices are in line with the market price.

When we went into the marginal fields business, people told us it was a waste of time; that it was not an easy thing to do. We have become one of the most successful marginal field’s operators in Nigeria today. We want to leverage on that. We have been producing and exporting oil for 10 years, then what? Once you begin to add value, set up a refinery, a power or petrochemical plant, then you are talking about creating jobs and impact on the economy. An entrepreneur is a risk taker.

In the next 10 years, we plan to increase our oil production to 100, 000 barrels per day. Now, the size of the investment that will enable you to achieve this entails a number of things. You have to get the reserves, you have to buy the oil, buy the concession – we are looking at anywhere around $500 million dollars or more. This will give you the level of reserve you need for that size of production. Given this range, in the next 10 years we are talking of investment to the tune of $2 billion to cover upstream, refining and petrochemicals and power.

The next question, how are you going to fund this? It is not easy to find funds but you can find money when you have a good quality project. I believe so. Getting funds for our modular refinery was tough because we had to approach international development financial institutions and were subjected to rigorous financial evaluations. Once this is up and running, it opens doors for similar projects. People are already talking to us about wanting to do a one deal or the other.

You must invest money in the development of the project. This is risk capital; it does not give you anything. This enables you to de-risk the project and make it attractive to investors, both local and international. For us, it is a mark of faith in our country and a way of giving back by adding value. For a power plant, for instance, you need development capital of between $7 – 10 million that you spend and all you have are just papers. electricity 4th grade powerpoint This is because at the end of the day all you would have are reports from various consultants, feasibility, market and environmental studies etc. Mind you, you are engaging international consultants that you have to pay. This is the documentation you require to approach international development finance institutions.

However, there are issues out there that need to be solved. The government has no option than to solve th ese problems. It might take one year, two years or ten years. Our population is growing at 3 percent annually and you do not have enough electricity, to provide jobs and create employment opportunities. If you do nothing, you have a big problem on your hands. So, those issues impeding the generation and distribution of power must be resolved and indeed they can be resolved.

We will develop a bankable project and will not wait for the Nigerian government. Now, as an entrepreneur, you do not wait for all the problems to be solved before you can act. If you do, you lose the opportunity. You must prepare ahead of the opportunity. The opportunities are big drivers for us; a big growing population, the second biggest economy on the continent. As a country, we are struggling to meet up to 10, 000 MW of electricity and we are going to need about 50, 000 MW.

It takes an average of two to three years to put 1 MW of gas power plant into the system. We are taking on this challenge as entrepreneurs. We have the gas. A diversified portfolio of assets is good for us. We are just looking for the right opportunity to put it in the market. We are preparing ahead of the opportunity. The opportunity must come. It is like this country, it has no option than to deregulate petroleum products. We are thinking long-term and strategically too.

For our power plant, we want to start with 300 MW. By March 2019, we will have a bankable 300MW project. Once the issues in that sector are resolved, tariff and liquidity issues; once we know that if we put power in the national grid we will get paid, then we will go ahead and make the investment. That is the way we are going systematically.

Well, PIB is very important for the energy industry, especially for international investors. It should provide clear fiscal terms and certainty, especially in the deep offshore space, that is where I see the real impact of the PIB. This is where the International Oil Companies (IOCs) and the government will have to arrive at a consensus of what is fair for taxes and other things. These are some of the things constraining investment in that space. For us, onshore players, we think there are opportunities especially if you are a Nigerian company.

However, all of us in this space are comfortable to just produce oil and export. electricity jeopardy powerpoint That gives you dollar revenues and some are satisfied with that. I come with a different mindset, maybe because I am not traditionally part of the industry. Some of my colleagues in the industry think I am crazy to be doing what I am doing. But I am passionate about this.

I want to make money and believe me, there is money to be made in Nigeria and if we invest in the right sectors, we still have an opportunity to make money. We are not going to stop. We will continue to look for new assets to buy and acquire. If we see a good asset today, we go for it, especially now that we are building a refinery; we need assets that will serve as feedstock for our refinery.