Mrs. Dolapo Okulaja-Kotun is the Executive Director, Operations at Ikwe-Onna Refinery Ltd – owners and project developers of the model flagship 5,000 barrels per day (bpd) modular refinery and industrial park in Akwa Ibom State. Okulaja-Kotun is also the CEO/Principal Consultant, Jade Consultants International Inc. and Jade Project Services Ltd.The Lead Consultant, Project Management and Business Development, Okulaja-Kotun is a savvy and seasoned certified Project Management Professional (PMP), experienced in strategic partnerships and in leading globally positioned Capital Business, Mergers & Acquisition; Engineering, Procurement Construction and Operations (EPCO); Exploration & Production projects and global IT deployments.Okulaja-Kotun is a founding board member, and current Vice Chairman of the Crude Oil Refinery-owners Association of Nigeria (CORAN), an association who is key in facilitating and providing sustainable and scalable solutions to the development, operations and success of modular refineries and gas plants in Nigeria. She was recently nominated to represent CORAN on the Minister of State for Petroleum Resource’s Steering Committee on the Establishment of Modular Refinery Intervention Funding. In this interview with Valuechain’s TEDDY NWANUNOBI, Okulaja-Kotun spoke on Ghana’s tall dream to become the West Africa’s refinery hub, why some modular refinery investors lost their licenses, and the cost of establishing a modular refinery.
Excerpts:
You appear to be passionate about modular refineries. Could you tell us why?
Yes, I can say I’m very passionate about the modular refinery. It is an industry that the government needs to really support, because right now, we need to increase our domestic capacity. We cannot keep exporting crude oil at $60, $70, and bringing back products of the same barrel at the cost of about $2,500. So, we need to increase our domestic capacity. With all the United Nations’ treaty goals and all that about the environment, what we need to be focusing on is, ‘how do we produce clean products?’
Because hydrocarbons are not going anywhere – renewable, yes! It’s an addition, but it’s not going to eliminate hydrocarbons. So, we’ve got to find out ways of refining our crude in a more responsible way. And God so good, in Nigeria, our crude is one of the best in the world. It’s sold at a premium. Great! It is categorised under Brent, but we are Bonny Light, and Bonny has one of the lowest sulphur contents. That means ordinarily, we are head and shoulders above the other ones like Russian and American crude, because they are so difficult to refine, and they cause lots of environmental issues. So, we need modular refineries, because they are localised. It makes it cheaper!
The cost of PMS (premium motor spirit) in Lagos (State) is different from the cost of PMS in Kano (State), or in Warri (Delta State), because of the transportation costs that are involved. If we have modular refineries in all of these locales, it cuts the transportation cost, it cuts the cost of production, which brings cheaper products to the citizens.
So, we need modular refineries to augment conventional refineries, not that it’s expensive to come to market. They don’t take as long. If I have the financial capacity, I can build a myriad of modular refineries in 18 months. I can do it simultaneously. If one year, we have financial capacity, we can build 10, 15 modular refineries within 18 months, which is what we need. We need to stop importing refined products that are in low grade, compared to products that we can use in-house, and also produce. So, Nigeria needs to become an export hub of quality refined products, and stop bringing in substandard products.
With the exportation of our products, we can talk about shipping. Definitely, if we are exporting our products, we will need ships. We are going to have to train human capital management. We have to train people on how to run this refinery, because there are so many derivatives and side services and side economies, side businesses that come out of refining.
Nigeria has got to wake up, because we know Ghana was actually challenging Nigeria. They wanted to become an export hub, because of this African free trade thing. They actually have a plan – a 10-year plan to invest $70 million – to have a refining hub in Ghana. Ghana doesn’t have crude oil like we do. So, why would Ghana be competing with Nigeria? Because we are asleep! But we thank God that the government has woken up, and they are actually encouraging modular refining in a more robust way.
As for the artisanal refinery, I don’t want to talk about it, because I don’t see how to legalise something that has been illegal, because we need to retrain them. I have a solution to all of these riverine areas. We can do a floating modular refinery. If your village has government-approved crude oil, we can set up a floating refinery there, refine your crude, and we give you the naira or the dollar equivalent to what you have refined. But that is one of the issues the government has to address, because artisanal refinery is not legal, and am I the one to legalise what is already illegal? That is beyond my scope!
But definitely we need to increase our domestic capacity, because we need to secure our energy. We need to go into renewable energy. We have sun. We have wind. We have so many things that we are not doing, because we are sleeping. So, we really need to wake up, and I think the first wake-up call is the modular refinery!
Dangote Group’s 650,000 bpd refinery will come on stream any moment from now. Are the owners of modular refineries like you threatened by that?
No. Dangote is not a threat to us, at all, because Dangote’s strategy and modular refinery (are) not the same. Dangote refinery is just based in one location, but modular refineries are situated at every location where the citizens can get immediate supply of their petroleum products’ needs.
Dangote cannot come into my market. For instance, I’m building in Akwa Ibom (State). It doesn’t make sense. By the time he’s selling his PMS to people in Akwa Ibom, I will sell cheaper, and who would then buy from him? It’s my own that’s cheaper. I think people like Dangote can focus on exporting our products to have foreign exchange.
Ghana seems to have challenged Nigeria with its tall Oil & Gas hub dream. Does that bother you?
For me, no! For Ghana, I’m not bothered. But the government should be bothered, because, for Ghana to be competing with Nigeria to become the West Africa’s hub of petroleum products, of refining, is a slap to the government’s face, not to me, because I’m an investor, and I’m doing my bid. So, what is the government doing? Government needs to wake up, which, I believe, they have, because they have set up the technical committee to ensure that Nigeria becomes the export hub, and stops all these imports of low grade petroleum products.
What is your take on implementation, because over the years, we’ve had issues like setting up committees for things like these, but they were not implemented upon?
Like I said, this is a new era, and the government cannot continue to pull the wood over our eyes. People are not as accepting as they used to be. Like, the government says this, we keep quiet. No! We are not activists. We are advocates! And because we’re advocates, we are going to keep pushing, and I’ve been pushing this for five years, and I’m not going to stop, until Nigeria becomes an export hub, and increases and improves our domestic capacity, supplies our people the petroleum products of their need. Not only that, to become an export hub, foreign exchange that is wasting would be in use for better thing, like education, infrastructure, science and technology – that’s what needs to happen, and that is why people like us will not keep quiet, so that the government would do what they need to do, because we are going to hold them accountable.
You’ve been in this business for some time. How are you encouraging new investors into modular refineries?
The kind of investors we need in a modular refinery, we don’t even have them in Nigeria. You know doing business in Nigeria, one has to have a Nigerian partner, because we are the killer breed of people. If you are going to have a successful business in Nigeria, you need to have a Nigerian business partner. The only way to encourage investors is, you have to have an enabling business environment. They need to know, if I’m going to invest $100 million, how am I going to get back my $100 million? What guarantee of security do I have for my assets? If all these activists come, and they burst my pipeline – we need security! Government needs to build more infrastructure. Can you imagine, in Akwa Ibom, we are the one building our road? How can we be building our road? We need a network of roads, rails to make transportation easier.
Would you mind letting an interested investor into what it would take to build a modular refinery?
DPR (Department of Petroleum Resources) says a modular refinery maximum capacity is 30 million (barrels). You can start from 1,000 barrels. It depends on the capacity of your refinery, and that would (also) depend on your project cost. You know, because of the economy of scale, anybody looking to build a modular refinery should not be looking at anything less than 5,000 or 10,000 barrels a day.
How much would that cost?
Anything between $50 million and $75 million, and that includes your land, your DPR licensing process that has to be done, and even power generation, because my company produces power to run our refinery, and also produces (power for) the community.
Talking about licensing, the DPR recently withdrew the licenses it issued to some modular investors for failure to execute or complete the project. What would you say made them back down from the business?
The reasons why people go into business vary. Some people have the misconception that, in owning a refinery, the government will give (them) crude oil allocation. But when they found out that it’s not crude oil allocation, but free stock guarantee, a lot of them allowed the licensing to go valueless. They did not actually want to refine. They wanted crude, and that, in a nutshell, is what is happening. But those of us, who are determined to increase our domestic capacity, and build a sustainable business that will provide lots of solutions environmentally, economically and socially, that’s why we are still considering a modular refinery, in spite of all the hurdles.