Encomiums as Nigeria’s First Modular Refinery Begins Operation

-By Gideon Osaka

Nigeria’s refining capacity is set to receive a boost with the official commissioning of the 5,000 barrels per day (bpd) Waltersmith Modular refinery and groundbreaking ceremony for the expansion of the refinery.
The refinery, located in Ibigwe, Ohaji/Egbema local government area of Imo state and commissioned by President Muhammadu Buhari is Nigeria’s first modular oil refinery.

The 5,000 bpd Waltersmith modular refinery is the first phase of a series of Waltersmith refinery development plans which will culminate in the delivery of up to 50,000 bpd refining capacity that will expand the product slate to include premium motor spirit (PMS), liquefied petroleum gas (LPG) and aviation fuel.
The expansion plan consists of 20,000 bpd crude oil refinery and a standalone 25,000 bpd condensate refinery both of which are at early stages of project development.

The 5,000 bpd refinery has a crude oil storage capacity of 60,000 barrels and is projected to deliver over 271 million litres per year of refined petroleum products such as diesel, kerosene, naphtha and heavy fuel oils, to the domestic market.

The Waltersmith Success story
The refinery is a Joint venture (JV) between Waltersmith Petroman Oil Limited, a leading independent Nigerian Energy company with 70% equity and the Nigerian Content Development & Monitoring Board (NCMB), a federal government parastatal with 30% equity. Significant funding support for the refinery comes from the African Finance Corporation (AFC), a pan-African Multilateral Development Financial Institution.

Waltersmith Petroman was established as an E&P Company in 1996 and successfully acquired the Ibigwe Marginal Field (OML-16) license in 2005 and delivered first oil in 2008.

At the heels of this successful entry into the Nigerian oil and gas industry, Waltersmith quickly grew production to over 7,000 bpd, built a 15,000 bpd Flowstation at Ibigwe to process crude from the Ibigwe Field and the neighboring NNPC/SEPLAT JV Ohaji South Field in OML-53. Anticipating additional growth in production from this hub, the company is currently expanding this facility to handle 20,000 bpd by the end of 2020.

A Peep Inside the Modular Refinery
In support of the federal government’s aspiration for energy, the company carried out a feasibility study for modular refining, and founded on the proximity of many producing oil, gas and condensate fields in the Ibigwe Hub.

By 2018, Final Investment Decision (FID) had been taken and in October 2018 the groundbreaking ceremony was done, effectively kicking off the construction phase in November 2018. The first phase of the modular refinery targeted 5,000 bpd of own operated crude as feedstock with alternative sources including the over 7,000 bpd NNPC/SEPLAT OML-53 JV Ohaji South production processed at Waltersmith’s Ibigwe Flow station.

The 5,000 bpd Phase 1 refinery was to be commissioned in Q2 2020, an achievement that would have resulted in 18 months to deliver the project, which would have been among the fastest in the world. By March 2020, the refinery had progressed to 98% completion, but was delayed owing to the global COVID-19 pandemic. The Phase 1 of the refinery will deliver about 271 million liters of refined petroleum products (Diesel, Kerosene, Heavy Fuel Oil-HFO and Naphtha) per annum.

Following the successful and exceptional execution of the first Phase of the refinery, Waltersmith initiated the Front End Engineering Design (FEED) for the 25,000 bpd Phase 2 condensate Refinery and the 20,000 bpd Phase 3 Oil Refinery to maximize feedstock from the nearby ANOH Gas Plant Company (AGPC). Also, some additional commercial discussions were progressed on some nearby oil and gas assets, with the investments proposed by Waltersmith to develop the oil assets to be used as feedstock for the 20,000 bpd refinery (and the gas assets for the 300MW Ugamma Gas Power Plant, both enormously strategic to the domestic energy security strategy of Waltersmith and aspirations of the federal government.

FEED for the 25,000 bpd Phase 2 Condensate Refinery was completed in Q1 2020, feasibility study in Q2 2020 and the EPCIC contracting process initiated with Final Investment Decision (FID) planned for Q4 2020 and delivery by Q4 2022.

The groundbreaking ceremony was carried out in conjunction with the commissioning of the 5,000 bpd Phase 1 refinery by President Buhari in November 2020 and when completed, the Phase 2 will deliver about 1.4 billion liters per year of refined petroleum products (Premium Motor Spirit –PMS, Diesel, Kerosene, Aviation Jet Fuel and HFO) in addition to the 271 million liters from the Phase 1.

How FG’s Modular Refinery effort is paying off
Critical to the success of the Waltersmith Modular refinery project is the federal government’s support, through NNPC and NCDMB, to conclude on advanced discussions to grant Waltersmith access to nearby condensate feed stock in Assa North / Ohaji and to invest in developing some nearby fields, within 30-km of the Ibigwe Marginal Field, through some commercial arrangement to enable the growth of current production from less than 10,000 bpd to over 30,000 bpd.

The federal government had severally pledged its commitment to ensuring that the expected completion date and refinery operations commencement dates were achieved and this was evidently achieved.
Part of the nine priority projects for the oil sector which the Minister of State Petroleum Resources is currently supervising to deliver in line with the Next Level Agenda of President Buhari, is working with private sector operators to aggressively increase domestic refining capacity.

Before now, Nigeria’s effort to ensure local sufficiency in refined petroleum products has been severally affected by the inability of the country’s refineries to work at full capacity.

To this end, attempts have been made by previous and current administration to drive private investments in modular refineries before the Dangote refinery is eventually ready.

Valuechain reports that of all the federal government efforts at increasing domestic refining capacity, one area the present administration has achieved greater success since it took office in 2015 is the aspect of modular refineries.

The government has recorded greater achievements on incentivising the take off of modular refineries, better than the planned repair of the existing refineries.
Apart from the licenses issued to private investors to build modular plants the government has also guaranteed a conducive environment for public private investment in modular refineries. The government had also gone a step further by approving total waiver (100 per cent) on custom duties for equipment imported for licensed modular refinery projects forecasting that with its efforts at least some modular refineries when completed could add over 100, 000 barrels a day refining capacity in-country.

Consequently, since 2016/17, construction has started on at least six modular refinery sites, spurred by the new vision for the Niger Delta and a raft of policy initiatives by the federal government.

The 7,000 bpd OPAC modular refinery at Kwale, Delta State, and the planned expansion that will increase crude processing capacity at the NDPR refinery to 11,000 bpd , are already at advanced stages.

Other modular refineries currently under construction are the Ikwe-Onna Refinery in Akwa Ibom; Azikel Refinery, Bayelsa; AIPCC Refinery, Edo and the Waltersmith Petroman Oil Refinery, Imo state.