The Nigerian independent Aradel Holdings, has reported that sales of Automotive Gas Oil (AGO), Dual Purpose Kerosene (DPK), Marine Diesel Oil (MDO), Heavy Fuel Oil (HFO) and Naphtha, all products of its crude oil refinery, amounted to $157Million in 2023.
The amount was only $13Million less than the company’s receipts from crude oil exports, which generated $170Million in the same year.
Aradel also earned $15Million from its natural gas business, which it described as “burgeoning”.
These three business units were responsible for the company’s close to 100% surge in profit after tax, from $35.47Million (2022) to $69.12Million (2023).
But it is important not to take the closeness in those earnings from refined product sales and crude oil export receipts too literally.
Aradel’s CEO, Gbite Falade, has been careful to explain in interviews the wide disparity in profit margins between refined product sales and crude oil exports. “In the upstream, you need fewer human beings to bring the crude to the surface”, he told Africa Oil+Gas Report in 2023. “Personnel that you need in the refining midstream and downstream is much more. The sort of quality standards that each product must confirm to and the Q&A processes, lab testing to make sure it works well, your process safety setup and so on, by the time you take a view of all of that, the headroom that you have between the difference in your feedstock price and your realized price at which you sell the processed product does not give you the same quantum of margin as in upstream”.
Still the company had gone ahead to commit over a third of its 9,300Barrels of Oil Per Day output in 2023 to process in its three-train 11,000Barrels per day capacity refining facility.
“Our refined product delivery volumes surged by 75.3% to 267.77Million litres in 2023”, Aradel says in its report.
“The utilisation rate of our refinery capacity experienced a significant enhancement, increasing to 42% from 24% recorded in the prior year, demonstrating our successful efforts in optimising operations and increasing productivity, “ Aradel explained.
“We achieved volume output of 3.55Million barrels of oil and 9.69Billion cubic feet of gas, alongside a significant boost in crude oil exports to 2.12 Million barrels. The deployment of the Alternative Crude Evacuation Route, along with the reduction in crude oil losses to 4% from circa 30% in 2022, underscore our pledge to efficiency”.
SOURCE: africaoilgasreport.com