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Waltersmith Refinery: Eliciting Hope of Nigeria’s Refining Capacity

-By Fred Ojiegbe

There appears to be hope that Nigeria’s refining capacity may be on the increase in no distant time with the construction of Waltersmith Refining and Petrochemical Company Limited’s 5,000 barrels per day, bpd refinery at Ibigwe field in the Ohaji/Egbema Council Area of Imo state.

The company had expressed its readiness to contribute about 271 million litres of refined products annually towards the development of Nigeria’s economy. Waltersmith modular refinery is one of the 10 out of 40 Licensed modular refineries making progress. The immediate past Minister of State for Petroleum Resources, Ibe Kachikwu had stated that out of the number, three are likely coming on stream by the end of 2019. He stated at the last SPE conference in Lagos, “out of the 40 private licenses issued to private investors to build refineries, only 10 have showed signs of progression.”

Waltersmith refinery, no doubt is coming at a time Nigeria is in need of improved refining capacity. Currently, the country’s four refineries have a combined refining capacity of 445,000 barrels per day, bpd, while Nigeria requires local refining capacity of 1.52 million barrels daily, mbd. According to the out-going Group Managing Director, GMD of Nigerian National Petroleum Corporation, NNPC, Maikanti Baru, Nigeria needs to grow local refining capacity to 1.52million barrels per stream daily (BPSD) to meet the need of premium motor spirit (PMS). Baru said the state-run oil firm planned to bridge the 20 million litre per day PMS shortfall in refining capacity.

He said: “Nigeria needs a refining capacity of 1.52 million barrel per stream day (BPSD) of crude oil in order to meet its PMS requirement by 2025.

“This capacity requirement includes Dangote’s 650,000 BPSD Refinery and NNPC’s current nameplate capacity of 445,000 BPSD (WRPC, KRPC and PHRC). This leaves a shortfall of 20million litres which is equivalent to 427,000BPSD.”

In a presentation titled: The roadmap for energy sustainability in Nigeria at the Society of Petroleum Engineers (SPE) Oloibiri Lecture Series and Energy Forum 2019 in Abuja, Baru, however, explained that in order to address this shortfall in PMS demand, NNPC is adding 215,000 BPSD of refining capacity through private sector-driven co-location of existing facilities in Port Harcourt Refinery Company (PHRC-100,000 (BSPD) and Warri Refining and Petrochemicals Company (WRPC-115,000 BPSD).

“Additionally, NNPC through its new initiative of establishing condensate refineries with private sector participation is providing clusters for in-country refining capacity totalling about 250,000BSPD, which closes the PMS supply-demand gap and creates positive margins to the investors.

“These improved in-country refining capacity plan ensures Nigeria’s domestic crude oil utilisation of up to 66 per cent with its attendant local,” the GMD said.

He also said that local petroleum product demand is expected to grow from 13.2 million metric tons in 2015 to 15.1 million metric tons in 2020 and 17.3 million metric tons by 2025 while the population growth corresponding to this demand was 182 million in 2015. For 2020, it is 207 million and 234 million in 2025 while average population growth rate is three per cent per annum.

The construction of Waltersmith modular refinery therefore seems to be one of the answers to the shortfall in Nigeria’s refining capacity. The refinery is expected to help in reducing the growing unemployment rate in the country by offering jobs to thousands of Nigerians, either directly or indirectly. It is also expected to rave up business activities in the host communities in Imo State, while contributing to the well being of the communities through a formidable Corporate Social Responsibility, CSR, programme that should be beneficial to the company’s identified publics.

The Niger Delta area is replete with stories of unfulfilled promises by mostly international oil companies, IOCs to their host communities. Cases of pipeline vandalism, destruction of facilities and kidnapping of oil workers have also made the headlines in the past, as well as spillage, destruction of peoples’ means of livelihood and abandonment. There is no gain saying the fact that Waltersmith, an indigenous oil company, understands the terrain and the challenges in Nigeria’s oil and gas sector, especially as regards host community issues. The company will do well by avoiding the pitfalls of the IOCs and tow the path of symbiotic relationship with their communities to engender a win-win achievement.

CEO of Waltersmith, Abdulrazaq Isa

The chairman/chief executive officer (CEO) of Waltersmith, Abdulrazaq Isa has assured that the 5,000 barrel per day (BPD) modular refinery located on its Ibigwe Flowstation, in Ohaji Egbema local government area of Imo State would be completed in the next 18 months.

According to him, the refinery when completed would help meet the petroleum products needs of its immediate operating environment of Imo and Anambra states.

Speaking on how the refinery will work, the CEO said, his company, which currently operates the Ibigwe Field (OPL 2004) would henceforth refine its 7,000bpd oil locally instead of exporting the crude.

He stated that this position would allow the modular refinery to enjoy uninterrupted refining of crude oil from its upstream business all year round.

“By so doing, Waltersmith will be in a position to contribute about 271 million litres of refined products (Diesel, Kerosene, HPFO and Naphta) annually to the Nigerian economy, serves as an import substitution for meeting domestic demand for products, create both direct and indirect employment as well as reduce the demand for foreign exchange from the country’s treasury to import these products,” he said.

Speaking on how he intends to grow the company further, he said, “The 5,000 bpd refinery is the first phase of a much larger development. Ultimately, we plan to increase capacity to 30,000bpd to process additional products including Petrol (PMS) and Jet Fuel.

“We have already executed an MoU with PCC of China towards the installation of the additional capacity within three years, after start up of the 5,000 bdp modular refinery in December 2020.”

“To ensure the security of crude supplies for that level of refining capacity, it is our intention to either acquire additional assets within 30km radius of this site or partner with assets owners to secure sustainable crude feedstock for the expanded refinery. We have no doubt we will receive the much-needed support from the federal government, NNPC, DPR and all stakeholders as the development expansion evolves,” he explained.

On plans to transform the company into an integrated energy entity, he said, “Waltersmith is also developing a 30 megawatt gas-fired power plant for which the Nigerian Electricity Regulatory Commission (NERC) has granted a power generation licence in 2017. The plant will be situated in the same energy industrial estate complex as the refinery and the flow station in the Ibigwe marginal field. “The power plant will utilize processed gas from Waltersmith’s Ibigwe marginal field and from third parties operating gas fields that are within proximity to the Ibigwe field. The power generated will be supplied to the national grid and is expected to contribute towards bridging the power supply gap in the country and create both direct and indirect jobs during the construction and operational phases,” he added.