THIS BUSINESS PLAN IS BASED ON A SERVICE PHILOSOPHY BUILT ON FIVE CORNERSTONE:
- Create a conducive work environment to enhance profit
- Create technical & professional excellence
- Establish a high level of customer responsiveness
- Proactively manage with a strategic plan
- Recognize the importance and value of our employees as individuals & team members
PRELIMINARY MARKETING PLAN
The main corporate strategy to acquire sufficient profitable market share is to collaborate with prospective owners of local oil fields to feed the refinery at below market price, to enable cost effectiveness and cost advantage over competitors.
Need, Supply And Demand Analysis
The rapid expansion in economy and industrialization in the Middle East, India and China has necessitated the need for more refineries in the oil producing areas of the world. Although India has seen a number of major oil and gas discoveries recently, there is still demand for refined oil. It has been a global trend in the refining business to cut down output of low-end fuel oil to favour high-value transportation fuels such as gasoline and diesel. This means more and higher capacity refineries. Nigeria has been exporting most of her crude oil. The four existing refineries in Nigeria are not adequate to produce the high-value fuels required by these new expanding economies. Hence there is need for more refineries in Nigeria with adequate processes and procedure for long and continuous maintenance for sustainability. There are plans by foreign investors to build refineries in Nigeria. For instance, “The Hindu”, an India’s National Newspaper of Tuesday, Nov 15, 2005, reports that Oil and Natural Gas Corporation and the Netherlands-based Mittal group plan to build an oil refinery in Nigeria and have offered to invest another $6 billion in building a power plant and railroads in the African nation.
Presently, Kuwait operates three facilities — Mina al-Ahmadi, Mina Abdullah and Shuaiba — with a total capacity of 920,000 bpd. Nigeria currently operates four facilities in Warri, Kaduna and Port Harcourt (2). Many of the oil producing countries have been more concerned with the provision of low-end fuels. The increase in the number of refineries in Nigeria will provide high-end fuels with added value hence yielding more foreign currency for the country.
Product Demands
The product demands, quality and prices drive the entire crude processing and secondary unit operations. Multiple streams with multiple blending options to make different grades of a product further make the task of refinery planning
cumbersome and demanding.Moreover, the future promises to add even more complexity through additional product specifications, environmental norms, changing feedstock, product prices,mergers and acquisitions. The African, American, China and many other economies have very high demand for hydrocarbon products. These and other markets will continue to expand and the demand for our products is certain.
COMPETITIVE BUSINESS STRATEGY
Currently the following refineries exist in Nigeria with their production slate.
Port Harcourt Refinery (PHRC-2), 210,000 bpd
Warri Refinery (WRPG-1), 125,000 bpd
Kaduna Refinery (KRPC-1), 110,000 bpd
Another very small refinery is undergoing construction in Uyo, Akwa ibom State. Its expected production is comparatively minimal.
These refineries do not meet the Nigerian market demand presently as a sizeable amount of the local consumption is imported (30 million liters of gasoline alone is imported on a daily basis). This is largely due to their operating well below capacity. The proposed refinery being a private entity will be mostly profit driven hence cannot be subject to gross inefficiencies. We shall absorb existing loose market share in Nigeria and will proceed to participate in other markets with spare market share as already identified. The main corporate strategy to acquire sufficient profitable market share is to collaborate with prospective owners of local oil fields to feed the refinery at below market price, to enable cost effectiveness and cost advantage over competitors.
PRELIMINARY PRODUCT SLATE
The Products of the proposed oil refineries include:
Diesel fuel
Fuel oils
Gasoline
Kerosene
Liquid petroleum gas (LPG)
Lubricating oils
Paraffin wax
Tar
Asphalt
The Table below shows the characteristics of crude oil from different sources in the world. The crude obtainable from Nigeria for the refinery is highly priced for its low sulfur content and end products. Hence our products will be mainly the products as listed above with little or no Tar and Asphalt.
Table 1 Characteristics of Crude Oil
| Crude source (%vol) | Paraffins (% vol) | Aromatics (% vol) | Naphthenes (% wt) | Sulfur (approx.) | API gravity (% vol) | Naphtha Yield (typical) | Octane No |
|---|---|---|---|---|---|---|---|
| Nigerian- Light (%vol) | 37 | 9 | 54 | 0.2 | 36 | 28 | 60 |
| Saudi-Light | 63 | 19 | 18 | 2 | 34 | 22 | 40 |
| Saudi- Heavy (% wt) | 60 | 15 | 25 | 2.1 | 28 | 23 | 35 |
| Venezuela- Heavy | 35 | 12 | 53 | 2.3 | 30 | 2 | 60 |
| Venezuela- Light | 52 | 14 | 34 | 1.5 | 24 | 18 | 50 |
| USAMidcont.Sweet | – | – | – | 0.4 | 40 | – | – |
| USA -W. Texas Sour | 22 | 22 | 32 | 1.9 | 32 | 33 | 55 |
| North Sea- Brent | 50 | 16 | 34 | 0.4 | 37 | 31 | 50 |
PRELIMINARY CRUDE OIL SLATE
Of the 606 oil fields in the Niger Delta area, 355 are on-shore while the remaining 251 are offshore. Of these, 193 are currently operational while 23 have been shut in or abandoned as a result of poor prospectivity or total drying up of the wells. Outside the Niger Delta, a total of 28 exploratory oil wells have been drilled all showing various levels of prospectivity as seen in Table 2. These wells include two (2) discovery wells in Anambra State, one (1) discovery well each in Edo State and Benue State each and Twenty-four (24) wells in the Chad Basin. However, production is yet to commence from any of the wells. There is sufficient crude oil supply available in Nigeria for the refinery for the next 30 years. Effort will be made to utilize the wells around the proposed site of the refinery. Immediate and upon the acquisition of a license to build this refinery, negotiation for the procurement of the most tenable right of ways for the pipelines to the respective production crude oil wells will commence.