Engr. Chikezie Nwosu, CEO Waltersmith
…Building of 50000 per day refinery
…Africa’s consumption of energy is poor while consumption grows GDP
…Emerges as an independent world class firm and the best refining and petrol-chemical company at NIPS 2020
-By Divine-Favour Efemena
The oil and gas industries in Nigeria have been operating for over 50 years since oil was discovered at Oloibiri in commercial quantity by Oil giant, Shell. But over the years as oil exploration went on in the Niger Delta, indigenous participation was minimal while the International Oil Companies (IOCs) with advanced technology and long-term experience have been dominating the space.
Notwithstanding, the first breakthrough for indigenous players in the oil industry was the advent of Marginal Field Programme (MFP) in 2003 where 24 fields were put on bid and some companies won the bid round. It was not an easy road for the indigenous operators as they had to contend with fund, experience and exploration activities.
At present, 16 fields are producing and contributing to national oil and gas reserves which was the initial intention of MFP to meet domestic aspirations of energy sufficiency in the country.
Indeed, one of the indigenous companies that has succeeded in its quest to ply its trade in exploration activities, is Waltersmith Petroman Oil Limited. Waltersmith has built a refinery and it was at the verge of commissioning the first phase before Covid-19 temporarily truncated the process.
At the International Forum for Women in Energy Oil and Gas (WEOG), Chief Executive Officer (CEO) of Waltersmith, Engr. Chikezie Nwosu asserted that in the company’s journey it has built an independent energy firm on 12.6million barrels of oil on the Ibigwe marginal field. It was established as Exploration and Production (E&P) company in 1996. Despite flurry of challenges, technical, commercial and fund, it got its first oil from Ibigwe in 2008.
In four years, the company garnered experience with funding and delved into Niger Delta west consortium in the acquisition of OML 34. “We started looking forward at what we should be doing as an energy company. Because the founders of this company are very visionary.” The company acquired a 300 Megawatts generation power in 2017 to add impact to its infrastructure.
Engr. Nwosu made it known that Waltersmith took a FID (Final Investment Decision), to commence phase 1 of the company’s refinery. It has advanced into phase 2 and 3 while planning access to additional feed stock in May 2020, but the Covid crisis changed plans.
Waltersmith will soon commission phase 1 of the refinery and launch ground breaking ceremony of phase 2 before the end of the year. “So, we are looking on to commission the refinery quarter 2 of this year. August is our target. As far as this whole process is concerned, we tend to build an industrial hub city in Ohiaji-Egbema Local Government Area of Imo state.
Speaking further, Engr. Nwosu said the strategy package of the indigenous company is to build an independent integrated energy company which will have a social economy impact in its area of operation and the nation at large.
On the refinery, which is part of the company’s business, it built 50,000 per day modular refinery with renewable energy power plant, gas processing to complete 1,500 barrel of oil per day production.
Engr. Nwosu pointed out that Africa is rich with natural resources but poor in energy industrial use and consumption. “If you look at the effect of energy consumption versus Gross Domestic Product (GDP), energy use in terms of capital, Africa lies in the bottom while all other developed country rank at the top.” To grow GDP, Africa should start consuming energy from oil and gas that it produces, direct relationship between capital and annual total consumption are at its lowest ebb.
The Waltersmith CEO was of the view that new journey to undertake as independent producers is not to treat oil and gas as commodity, “but to think about the sustainability process where to take this product to refine them to chemical, pharmaceutical and power agro industries. Also, innovation, Research and Development, these are all designed by Waltersmith to build an industrial park and city for the company and its host community.
He said if everything is done independently by indigenous players, they can light up the entire Nigeria with industrial parks.
The Learning Process
For Waltersmith, it has passed through a learning process in building a world class indigenous oil company. Engr. Nwosu explained that access to feed stock is imperative in the journey to modular refinery. The crude access should consider other sources of crude because any slight different in property in terms of quality will have an impact on operating the refinery.
It is also critical to any lender and funding partner to have a detail pact at feasibility study which must cover assessment of feedstock, product type, offtakers, logistics, the downstream market target, and cyber economics of the refinery.
Other learnings regulatory authority must be brought on board from day one and the relationship has to be managed for success whether it is at the stage of ATC or LGO . Before constructing a refinery, the Front End Engineering Design (FEED) remains the most aspect in the project. Substantial fund is needed at the detailed engineering process and determination of how the refinery will be powered is also necessary. The diesel, access to gas for a dual power system is significant. “If this is not done at an early stage, and key modifications are not made early , it can rather be expensive.”
Engr. Nwosu asserted that access to roads, trailer parks, logistics inputs and the feed point to and from facility logistics with HSC including solving security issues must be put in place. Preference of Trunkey approach for the entire project before startup, is critical while outside and inside battery limit component must be delivered as one package.
Overall learning, early engagement of a competent O&N contractor who will run the plant incase of an initial problem is essential. Functional laboratory operations and maintenance of risk should be determined at FEED stage, continuously matured and refined onto project commission.
The Waltersmith CEO advised that in project commissioning. An operator should not underestimate the need for trailer parks to significantly reduced traffic. Global Memorandum of Understanding (GMoU) of the community must not be undermined and this includes; employment opportunities, technical skills acquisition programme etc. All these will create avenue for both skilled and unskilled opportunities in less complex part of the construction.
Process of transparency is the key to all funding partners. They must be given regular reports, technical cohesion and financial status of the company. Also allow partners frequent access for facility visit. Operator needs a valued proposition of how to get discount that will prove the profitability of the refinery.
Engr. Nwosu disclosed that midstream and downstream products are mostly sold in naira. “There is a foreign volatility problem and you must have a fresh packaging of how you are going to manage.”
Waltersmith will commission its refinery within the period of six weeks for product to come on stream. In principle, while the company builds phase 1 it decided the FEED for phase 2 which is 25000 per day condensate refinery. This is more complicated than 5000 barrels per day because it will be producing Premium Motor Spirit (PMS). The format and challenges of phase 2 is different from phase 1 due to access to feed stock.
Waltersmith has recorded some achievements in its world class installations, service company installed facility for 24 days. The indigenous company got support from government and regulators.
Thus, Engr. Nwosu submitted that, part of the progress in building a modular refinery, early partnership with regulators helps. The company consulted Nigerian Content Development Monitoring Board (NCDMB), Department of Petroleum Resources (DPR) and Nigerian National Petroleum Corporation (NNPC) for assessment and guidelines. In building refinery, relationship from early part the project should be enhanced.
Due its robust management practice, Waltersmith got an award at the Nigeria International Petroleum Summit (NIPS) 2020 including the best refining and petrol chemical company as an emerging independent world class firm. These speak the fact that it has done well and successful.
In terms of recruitment of personnel that will manage operations of the refinery, Waltersmith has recruited skilled labour for phase 1. The company is gender sensitive hence apart from the catchment area, targeted recruitment exercise was done for women and 50% of the employees are females. This includes: technical operators, maintenance, ICT, logistics, information, administration, marketing and sales officer. Essentially qualified women.
In terms of pre and post covid-19 going forward as the company expands in building larger refinery, there will be expectations from the community. There are plans in the works to be able to meet expectations in terms of skills acquisition and impacting agro business in the area of operations.
There was always a challenge in funding, but access to fund for the first phase was minimal.
The critical intervention needed is feed stock. For Waltersmith refinery, the company is having conversation with government about access to feed stock around its area of operations for phase 2 and 3 of its refinery.
According to Engr. Nwosu operators are perturbed concerning the issues of access to forex, earnings of products are in naira, “what we need is dollars to be able to pay for some of the contractors and other parts of the refinery. That whole process has to go through our banking system especially the Central Bank of Nigeria.”
Indeed, Waltersmith has achieved an impressive performance between 1998 to 2020. The key attribute to its success is the efficient stakeholder management and transparency which are cardinal ingredients of a thriving business.