From 5,000bpd modular refinery to 100,000 is our target—Waltersmith Oil boss
Contrary to the trending fears of heavy losses in the nation’s emerging Modular Refinery segment of the oil and gas industry, the chairman/chief executive officer of an indigenous exploration and production company, Waltersmith Petroman Oil Limited, Mr. Abdulrazaq Isa, has given insights on stability and growth plans.
The company had earlier gotten licence to construct a modular refinery in Imo State and has started activities towards early delivery amidst industry fears of losses due to the cost ineffectiveness of modular refining in terms of meager output.
However, in an interview, Isa said “Refining margins are big issues, transportation cost is a big issue and we have eliminated this through the location of our plants to a large extent. This is because the plant itself is located right where the crude oil is produced, which improves our project economics. Our market is just about 30 kilometres away from where we are.
We know that as a standalone modular refinery, the margins are very thin. We are not oblivious of the criticism of modular refinery. If you are not in our own situation and you set up a modular refinery somewhere, you will have these challenges being talked about”.
“We know that as a standalone modular refinery, the margins are very thin. We are not oblivious of the criticism of modular refinery. If you are not in our own situation and you set up a modular refinery somewhere, you will have these challenges being talked about.
“Once we get this going, we will then improve on it by increasing the modules to about 30, 000 barrels a day and when we are able to do that, then the whole economics will begin to actually be more positive. We see this as a starting point despite the inefficiency that people claim exists in it. We have started and are positioning ourselves to be one of the pioneers of privately owned refineries in Nigeria. Despite the skepticism, I believe we have a business case. We are helping to solve some of Nigeria’s energy needs.
Continuing, Isa revealed that “We have started with 5, 000 barrels a day and we are going to add more modules that will take it to about 25,000 to 30,000 barrels a day. Our strategy is to take crude oil that we produce, that is close to us, put the plants very close to the source of the crude oil, refine it and distribute it within our area of operation. So, the critical issues that people refer to, we would have eliminated some of them”.
“In the next 10 years we plan to increase our oil production to 100, 000 barrels per day. Now, the size of the investment that will enable you achieve this entails a number of things. You have to get the reserves, you have to buy the oil, buy the concession – we are looking at anywhere around $500 million dollars or more. This will give you the level of reserve you need for that size of production. Given this range, in the next 10 years we are talking of investment to the tune of $2 billion to cover upstream, refining and petrochemicals and power.
Business Hilights recalls that Waltersmith Petroman Oil Limited was established as an indigenous exploration and production company in 1996. It was awarded the Ibigwe field located in OML 16 (now OPL 2004) in 2003 after participating in the marginal field licensing round specifically designed for indigenous companies.
The firm has been developing and operating this field through a farm-out agreement executed in 2004 with Shell Petroleum Development Company (SPDC) and its Joint Venture Partners, including the Nigerian National Petroleum Corporation (NNPC).
