The new oil refinery being built by French energy technology group Axens for Nigeria’s BUA Group in Akwa-Ibom State with a capacity to produce 200,000 barrels per day (bpd) will break ground by May this year.
“We are on course with our Akwa-Ibom Refinery project,” BUA Group chairman Abdul Samad Rabiu, told MoneyCentral in an interview in Lagos.
“The project is on, we expect to break ground by latest May, 2021 and once that is done, we expect that the project will be concluded in 3 years.”
Nigeria currently imports 90 percent of its petroleum products.
The country imports petrol from abroad in largely opaque swap deals with traders including Vitol, Gunvor and Trafigura and oil majors like Total and BP. Cargoes of crude leave Nigeria, and petrol is imported in return.
“One of the reasons why we decided to embark on that project is simply because it is important for us as a company to use whatever resources we have locally to add value to the life of the people,” Rabiu said.
“We spend 35 percent of our foreign exchange on importing petroleum products. Let’s use whatever we have locally and add value.”
Meanwhile the 650,000bpd mega-refinery being built by Africa’s richest man Aliko Dangote should come on-stream next year.
If the commercial refinery projects all come to term, Nigeria could refine 850,00 bpd, excluding NNPCs refining capacity that’s largely moribund.
The country however today consumes between 450,000 and 500,000bpd.
For Rabiu, Nigeria’s own growing demand, plus the West African regions, will match the combined output of BUA’s, Dangote’s and the NNPC’s refineries.
“If the question then is why are you setting up another refinery when there is a similar big project already on ground in the country, my answer will be that Nigeria offers a huge market. In addition to this is that, the location we have is better than any location because we are just by the seashore and as such, do not have to set up some infrastructure that will require being set up along hundreds of miles to where the actual project is. So, we thought that the location gives us a very good advantage,” Rabiu told MoneyCentral.
The plastics output of the BUA refinery will similarly be turned to export, where “the market is very, very strong,” said Rabiu.
The refinery complex is set to produce 350,000tn per annum of polypropylene. BUA Group is still in talks about the feedstock and says that it will build a plant to provide power to its refinery.
“The truth is, you will be able to add value, you will be saving money if you are able to produce locally. We will be saving money not only on the refining aspect of it but also on the trade. We currently spend a lot of money to transport crude and also to bring back the finished product. So if you are saving the cost of just the trade aspect that will be saving a lot,” Rabiu said.
“So, we decided that this is a huge opportunity area, Nigeria is consuming a lot of the product and not just the petroleum product but all other by-products of it.”
Rabiu stressed the importance of good technology for the refinery:
“We have gone into contracts with some of the best technologies in the world. You know Chinese technology is good, Indian technology is good, but when you are talking about complex projects such as the one in question, I think the Western world has a better offering and we decided to go to the best to work for us on this project. We will be working with Axens of France. They are the number one firm in the world when it comes to this kind of project. So, we are using the best names and service providers in the industry. Yes, making use of these big names comes at a cost but then you are sure of getting the best results and the project will be delivered as timed.”
Rabiu explained further on how technology will save BUA money arguing that his investment in sustainability will pay off in the long run, as new fuel standards continue to evolve along with the climate crisis.
“It is in the DNA of BUA Group. Look at our cement plants, the most sustainable in Nigeria, same with our sugar plants. This is what we try to do with all of our projects. By doing so, you are able to save a lot of valuable time and money. You see, if a project for instance is costing you N100 million using a lower quality technology and it takes about five years to have the project concluded and delivered and on another hand you are spending N200 million on same project and gets it delivered in 2-3 years, the money saved in finishing it on time, will be way more than what you think you have saved. Hence our decision to go to Europe for our service providers on this project.”
Axens will supply the basic design for the refinery and the catalysts that make it work, which the BUA Chairman said the pandemic has made it such that they are able to deliver on the project at a bit lower cost than what it would have been a few years ago when the price of crude was different from what it currently is.
“If you see an opportunity where you are able to get into any venture at very competitive pricing, I tell you, just jump at it. So, for us, we felt that the timing was good and that we had a very good location,” Rabiu told MoneyCentral.