Stakeholders at PwC’s forum recommend partnership between marginal field owners, indigenous refiners to boost refined petroleum products

Oredola Adeola

New owners of the 57 marginal oil fields recently issued Petroleum Prospecting Licences (PPLs)  by the Federal Government have been encouraged to partner with indigenous oil refiners and owners of idle refineries to address their perennial feedstock(crude oil) challenge, in order to boost Nigeria’s domestic refining of petroleum products, instead of quest to evacuate crude oil to the export terminals.

This was part of the suggestions made by experts at the PriceWaterhouseCoopers (PwC) Nigeria’s Oil and Gas stakeholders’ forum themed: ‘Marginal Oilfield Financing: After Winning, What Next?’ held on Wednesday in Lagos.

EnergyDay’s check showed that the indigenous oil refiners under the aegis of Oil Refiners Association of Nigeria (CORAN) had recently appealed to the Nigerian National Petroleum Company Limited(NNPCL)  to sell its crude oil allocation to them.

Some owners of the 57 marginal oil fields on their part had recently also appealed to the Government to compel the International Oil Companies, IOCs, to grant them access to existing pipelines to evacuate their crude to export terminals.

The panelists at the highly attended stakeholders forum while sharing the perspective on the investment opportunities within the Nigeria upstream space disclosed that it is more economical to create a synergy between owners of marginal oilfields in Nigeria and indigenous oil refiners whose primary challenges is access to crude oil.

Dr Layi Fatona, Executive Vice Chairman, ND Western Limited, in his experience sharing presentation revealed that so many indigenous refineries in Nigeria have been built for many years without availability of crude oil to improve on domestic refining.

He said, “Who says they cannot form partnership with owners of OML to off-take their crude production. The most important thing is that the  common goal of all the owners of the Petroleum Prospecting Licences, PPLs , is to produce for profit. It does not necessarily have to be crude exploration for exportation.

“At ND Western Exploration & Production, we have never been hampered by the urge to achieve Organisation of Petroleum Exporting Countries and its allies, (OPEC+) production ceilings or quotas.

” As  an integrated energy company, we refined 100 percent of the crude oil that we produce in  our mini refinery. We do not export, our target is the domestic market.

“I do not think it is economical to suggest marginal field operators  to be concerned about contributing towards improving Nigerian OPEC’s crude oil production quota.

“The fundamental focus of every indigenous player in the Nigerian oil and gas industry is concerted agreement to collaborate in addressing Nigeria’s energy needs. This can only be achieved when we agree to work together.

“In this case, we would need to build trust amongst ourselves with a very common agenda. There is a common goal of wanting to succeed, and once that is the guiding principle every other thing would naturally come to play.  Complex problems require simple solutions,” Dr Fatona noted.

The ND Western Ltd Executive Vice Chairman however insisted  that focus of the marginal field owners should channel production efforts from the well heads to the refineries, adding that there is  no need to export crude oil, since the whole concept is about adding value.

Aysha Abba, Managing Director, SubDrill, in her contribution on the subject matter, also suggested that  directing crude production to domestic refining could be the ideal thing to do, rather than spending so much resources and time on exporting the crude oil.

According to her,  this is only possible if  the economics is right for any of the owners of the Petroleum Prospecting Licences, PPLs and the refiners.

She said, “It is common knowledge that the shipping industry accounts for about 3 percent of global greenhouse gas emissions. Crude oil vessels powered by fossil fuels, account for a significant percentage of maritime emissions.

“We are looking to cut that greenhouse gas emission down and one of our strategies is to look inward by supporting domestic refining of  the  crude oil that we produce. We need to add value to your product, that makes economic sense.

“But this may necessarily not always be right for some field owners because of the proximity of the field to the refineries. Some are situated close to the refineries, while others are distant apart, as it would cost more to build infrastructure around evacuating the crude oil to the available refinery that is willing to partner.

“The partnership between the field owners and refiners also depends on how much both parties are willing to agree on terms of product pricing.  The type of facility that is available for the evacuation of the crude into the refineries. Proximity of the well to the refinery. If the economics does not make sense for a field owner then it may not be right.

She however suggested that the parties may be forced to consider all the available options between product export or domestic supply.

Aysha further noted that SubDrill Services Limited, an E&P company, operators of Asasa W. Field Offshore Akwa-Ibom is  fortunate to have some refineries that are not too far from our field and some are springing up around the corridor. If the economics is right and we all can partner, this could be considered.