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Inside Waltersmith Modular Refinery

-By Gideon Osaka

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.

Statistics indicates that Nigeria currently has a 445,000 barrels a day refining capacity solely accounted for by the Nigeria National Petroleum Corporation (NNPC) four separate refineries that operate well below capacity.

According to Valuechain’s findings, the government is banking on the coming on stream of the 650,000 barrels a day Dangote refinery to solve its refining challenges. Attempts have been made by previous and current administration to drive private investments in modular refineries before the Dangote refinery is eventually ready.

It would be recalled that over 45 private modular refinery licenses were issued between 2008 and 2018.

Apart from the licences and putting the conducive environment for public-private investment in modular refineries, the government had also approved total waiver (100 per cent) on customs duties for equipment imported for 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.

Despite all these efforts, not too many modular refineries have been commissioned.

Although, Nigeria had only one functioning modular refinery which is the 1,000 barrels per day (bpd) Niger Delta Petroleum Resources Ltd. (NDPR) refinery in Ogbelle, Rivers State, construction recently started on at least six modular refinery sites.

Some of the modular refineries where construction recently started are the 7,000 bpd OPAC modular refinery at Kwale, Delta State; the Ikwe-Onna refinery in Akwa Ibom; Azikel Refinery, Bayelsa and AIPCC refinery, Edo.

Others like Petrolex Refinery, Ijebu Ode; African Refinery, Port Harcourt and Southfield Refinery, Ologbo, have either completed detailed engineering, secured modules to relocate or the equipment are being fabricated at the manufacturer’s yard, according to the DPR on its website.

However, one of the modular refineries under construction whose completion is going ahead of the original schedule is the 5000 (Phase 1) modular refinery being developed by a wholly-owned Nigerian integrated energy company Waltersmith Refining & Petrochemical Company Limited in Imo state. The initial target was to deliver the modular refinery project in two years, but it is now on track to be completed in 18 months.

The refinery is one of those the government forecasts that once it comes on stream should be able to close the petroleum product supply-demand gap.

In October 2018, Waltersmith performed the ground-breaking ceremony of the 5000 bpd modular refinery and has already commenced work on the development of an additional 25,000 bpd.

Abdulrazaq Isah, Waltermith Modular Refinery CEO

The fundamental reasons for embarking on the Waltersmith modular refinery was not far-fetched.

Waltersmith Petroman Oil Limited which became a wholly owned Nigerian company in 2001 had in 2003, participated in the Nigerian Marginal Oil field licensing round for indigenous companies and was awarded the Ibigwe field located in Oil Mining Lease (OML) 16 by the Federal Government. To date, the company has produced over 12 million barrels of crude oil from the Ibigwe field while current production averages +/- 7,000 bpd. The company has set production targets of 100,000 barrels of oil per day (bpd) and 500 million standard cubic feet per day (mmscf/d) of gas by 2026.

As part of its aggressive growth strategy in line with its long-term goals and objectives the Waltersmith modular refinery became important to stem the crude loss resulting from crude handling and the cost of crude transportation from the Ibigwe marginal fields.

The project owners, Waltersmith Petroman Oil Limited (70 per cent) and NCDMB (30 per cent) have worked assiduously to ensure the phase 1 delivery timeline which has been pegged at 18 months.

The phase 1 of the refinery is expected to contribute about 271 million litres of refined products including Diesel, Naphtha, HFO and Kerosene annually to the domestic market and create both direct and indirect jobs particularly within the host communities.

Final Investment Decision (FID) for the refinery project was taken in September 2018 with an 18 month delivery time from November 2018 to May 2020, for Phase 1.

Phase 2 which commenced with the Front End Engineering Design (FEED), is expected to be delivered this month or early next month while ground breaking for the 25000 bpd refinery will take place in May 2020. There are plans to further expand the plant to 30000 bpd.

The Minister of State for Petroleum Resources, Chief Timipre Sylva, recently visited the Waltersmith modular refinery in Ohaji/Egbema LGA, Imo State to inspect ongoing construction at the refinery which is at an advanced completion status of over 90 per cent.

The refinery is a partnership between Waltersmith (70%) and NCDMB (30%) with NCDMB providing major guidance and contributions on Nigerian Content, Technical and Commercial issues and Corporate Governance. That FID for the Refinery Project was taken in September 2018 with an 18-month Delivery time from November 2018 to May 2020, for Phase 1.

Phase 1 of the project is expected to create several direct and indirect jobs for the host community and contribute an estimated 271 million liters of refined products including Diesel, Naptha, heavy fuel oil (HFO) and kerosene annually to the domestic market.

Following the successes recorded with the commencement of construction of the modular refinery and its potential expansion, Equatorial Guinea plans to replicate the initiative, so it can stop the wholesome export of its crude oil and begin to add value to the resources.

To this end, the Nigerian Content Development and Monitoring Board (NCDMB) and Waltersmith Petroleum Oil Limited will assist the country to develop modular refineries in the central African nation, so it can process some of its crude oil and derive increased value from the hydrocarbon resources.

The Minister of Mines and Hydrocarbons, Equatorial Guinea, Gabriel Mbaga Obiang Lima recently visited the Waltersmith modular refinery at Ibigwe in Imo State saying that his country should be able to replicate the refinery based on the cooperation and experience between Equatorial Guinea, Waltersmith and the Nigerian petroleum industry.

Noting that Nigeria had vast experience in the hydrocarbons industry, Lima added that Equatorial Guinea would also understudy the commercial aspects of the modular refinery project to ensure that its planned investments would be economically viable.

He expressed delight that a new dawn had come in the African oil industry and nations needed to start utilizing their crude oil resources more efficiently. ”We cannot continue to export crude oil. We should start processing our products and we are watching what Nigeria is doing and we want to replicate them.”