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‘Advent of electric car not a threat to new refineries’

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Eruani

President of Azikel Petroleum, which is building a refinery in Bayelsa State, Dr. Eruani Azibapu Godbless, is optimistic that the advent of electric cars would not threaten the use of hydrocarbons to fuel engines, saying most countries have not advanced to the point where they could totally rely on electricity for cars, engine boats, ships, vessels, etc, more so as hydrocarbons are still being used to generate electricity, which is in short supply in many countries.

The world is gradually thinking of electric cars, de-emphasising the use of fuel (hydrocarbons). Does this worry you even as you go into petroleum refining?
It is a cause for concern, generally in the world, especially in the oil and gas sector, but hydrocarbons are quite abundant in our region and we have not advanced to the extent at which we can totally rely on electric for cars or electric cars.

We would continue to make use of what is available today, which is oil and gas. The Nigerian economy is still and will for some time continue to be largely driven by hydrocarbons. So, the advent of electric car is not a threat to new refineries.

Also, Nigeria’s power generation and distribution capacities at the moment are not very sufficient and efficient. That is why we have a lot of supplementary energy from gas.

So, the use and reliance of hydrocarbons to power vehicles and engines is going to stay for a while, just as we are going to need gas to even generate the electricity needed for the cars we are talking about for some time to come before we can totally migrate to electric cars.

Where we have electric cars and we still need gas to service these cars, then we would still find the need for the hydrocarbons.

I do hope and indeed anticipate that in the next several years to come, Nigeria would still be dependent on the hydrocarbons. More so, the speedboats on our waterways, most of the vessels and vehicles would still be dependent on fuel; hence our business model would still suffice for a while.

As long as Nigeria remains a crude oil producer, we are going to take advantage of the resources that abound around us and free the country of scarcity of refined petroleum products.

How are the products from your refinery going to impact on the current importation of such products?

It will surely reverse the net import of petroleum products. More so, even though we are the only one getting to the finishing point at the moment, we are not going to be the only one involved in modular refining, as many have been licenced. But it is a good starting point.

There are countries that have multiples of smaller size modular refineries that build up to large capacity output for the country.

When you aggregate the total capacity of all the modular refineries coming on stream, it would be very significant local refining of petroleum products that would reduce the amount imported. It is a long-term investment that would someday eliminate the importation dependence of products.

How are you going to distribute products?
Our distribution strategy is similar to what is obtainable in Nigeria today. Our catchment area is the Niger Delta and the refinery has 10 loading bays, mostly by truck, at the moment.

We already have some off-takers, but we are also encouraging smaller independent marketers to avail themselves of our products to serve their customers. Many filling stations are currently not functioning because of lack of products.

The refinery would encourage other diverse businesses to come on, such as tank farms for storage of products and trailer/tanker parks, to ease the movement of tankers and avoid them littering the roads, thereby disrupting free flow of traffic on the major and adjourning roads or causing accidents.

What steps are in place to avoid the pitfalls of the current refineries in the country?
The major challenge of existing refineries is maintenance, ostensibly because they were built a long time ago and technology is ever-evolving.

Ours is of modern and most recent technology. There is minimal human interface in the operations of the refinery.

As for the operation of the refinery, we have a 48-month contract with an international company to operate the refinery with some Nigerians for the transfer of knowledge and managerial skills. The same with maintenance; when you maintain as at when due, it is never an issue.

What is the guaranty that Azikel Refinery would not shift completion date?
We have what we called Liquidation Damages and Performance Guarantees in operation. We have signed major contracts and they are time-bound. Even though we cannot address all the unforeseen circumstances, we have liquidated damages with these international contractors, whereby targets have to be met at certain deadlines. And if such targets are not met, they have to pay damages for not achieving the targets.

However, there are force majure that are unforeseeable and could arise at any time and there is nothing anybody can do in such a situation.

But we are on target and we are sticking to the schedule, but in a multi-dynamic industry like this, some circumstances are unforeseeable.
I have made a huge investment and I earnestly want the people to start benefiting from the availability of locally refined products.

How are you going to source the crude?
That is ease, because the refinery is separated by a three-road wide from the source of crude- Shell Petroleum Development Company Joint Venture (SPDC JV)- which is to supply crude to the refinery.

We would have more than enough supply from Shell to the refinery, because our capacity is 12,000 barrels, which is less than what we could get from them. But we hope to increase our capacity over time.

What is the level of progress towards the completion of the refinery?
We have taken some impressive steps in the completion timeline of the refinery, because it is a project that excites us and we are very eager to see it completed on schedule and contribute to the Nigerian economy, especially to reduce the scarcity of refined petroleum products in the country through local production.

Being situated in the Niger Delta, which is the hub of crude oil exploration/production, it excites us as the first private modular refinery that is nearing completion and ready to refine products at home.

It is a quite challenging project, financially demanding and requiring commitment and expertise. The Nigerian state, through the Nigerian Content Developing and Monitoring Board (NCDMB), has also shown commitment and energised us in several ways by encouraging the establishment of the modular refinery project.

All these have shown the world that Bayelsa State and indeed the Niger Delta is safe and condusive for investment and business and helped us to attract the expatriates we have, over 21 of them, from different countries.

Overall, we have achieved over 65 per cent completion and we are hoping to start operations by the first quarter of 2021. The modules have been fabricated and we are already receiving most of our heavy equipment. The site that was generally swampy and unusable before now has taken the shape of skyscrapers. The administrative building is completed and most of the civil works, including roads, terminal operations building and infrastructures are completed. Once the core of the refinery, which is coming in form of modules, begins to arrive, we would start to do the installations.

The encouragement is that for once, being the pioneer company in the modular refinery project, we are part of the changing economy and driving the new industrialisation of Bayelsa State, the Niger Delta and indeed, Nigeria.

Our refinery is a bit specialised and sizeable, because it is a 12,000 BPD (Barrel Per Day) hydroskimming refinery built on modules mounted on skids, with the latest technology for low emission, rated a Nelson Complexity of 5.3, powered by UOP Reformer technology to produce a very high RONC Reformate, mixed with the LSR and Butane to produce PMS at a RONC of 89.

We are maximising the production or refining of petrol, diesel, aviation fuel and kerosene in one complex.

Where are the modules coming from?
The modules are being fabricated by McDermott based in the United States (US), which is very experienced in petrochemicals and refining.

How would last week’s inauguration of the Board of Azikel Petroleum Limited impact on the project?
The inaugural Board meeting held on October 23 in Yenagoa, the Bayelsa State capital. The Board, which is made up of experienced Nigerians at home and abroad, as well as expatriates, is to give high sense of direction, managerial discipline, focus and mission accomplishment. It is to give verve to the project and see to it that all objectives and targets are accomplished.

The members’ wealth of knowledge is expected to energise and keep management on track and see to the respect of acceptable corporate governance and international best practices.

How is the operating environment, as the Niger Delta is known for agitations and restiveness?
There are quite a few cases of restiveness, but our operational model is quite different, in the sense that we have a robust engagement strategy with the host communities and locals.

Bayelsans are counting on us to deliver and because it is the hope of all of them to see the project completed, we have unprecedented support from the locals, who know that they are the first line of action of the defence; hence we do not have any crisis around us.

In any case, we engage the locals in some of the activities of the refinery, such as supply of necessary materials and services, and this has cemented our cordial relationship.


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