The Chairman/Chief Executive Officer of Waltersmith Petroman Oil Limited, Abdulrazaq Isa, spoke to journalists on his company’s new modular refinery project and the vision to transform Waltersmith into an integrated energy company.
See an excerpt below:
Our modular refinery is going to make available diesel and kerosene which is currently being imported into the country. No matter what people say about the inefficiency of modular refinery, we are utilising what is available in this country and adding value to it to provide diesel, kerosene which some industries utilise. Nigeria needs products, refined products. Despite the existence of four large scale refineries, we depend almost 100 percent on imported products.
There is no other modular refinery that is operating successfully in Nigeria today, apart from NDPR. That modular refinery does not make money? I do not hear that. I do not see it. I have gone to a global financial institution like African Finance Corporation (AFC) and convinced them to give us me money to fund our project. With our modular refinery project, Nigeria is going to have a private sector-owned refinery by an oil producing company that is providing its own feedstock and operating it as efficiently as it has operated its upstream business. Apart from NDPR no other company in Nigeria is currently doing that. For us, our motivation is to add value to the crude oil we produce and this is a critical motivation for us and we are going to do this in a very efficient way. Our aspiration, which is why we have gone modular, is to add and progressively grow capacity.
We 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.
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 you are talking 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 scepticism, I believe we have a business case. We are helping to solve some of Nigeria’s energy needs.