Why we want Amakpe refinery to come on stream next year '

3 Comments » August 14th, 2008 posted by // Categories: Energy Development Project




Why we want Amakpe refinery to come on stream next year – Amanam, CEO

Thursday, August 14 , 2008

•Usua Amanam
Photo : Sun News Publishing

Two years ago, it was very difficult to even make a telephone call through what was then known as the NITEL exchange, but today, I think there is one GSM network or the other in all the nooks and crannies of this country, that to me, is a very good development. That was the introductory remark of Usua Amanam, President and Chief Executive Officer of Amakpe International Refinery Limited when he answered reporters questions in Lagos recently on the state of work at the $100 million Amakpe private refinery in Akwa Ibom state.


Decision to set up Amakpe International Refinery in Nigeria
You see, I have always looked at Nigeria as an island surrounded by water, and where the people on that land surrounded by all the water do not have the water to drink. It is as bad as that. It has been so difficult for Nigerians in terms of oil and refined products. We are so blessed in Nigeria with crude oil to the extent that we ship this to other parts of the world, and they have to refine it in the United States and many other parts of the world and bring it back to us.

So when the opportunity came for private investors to come into the petroleum refining industry, we saw the challenge and we applied for a licence which was granted by the Department of Petroleum Resources (DPR). Amakpe Refinery was one of the 18 granted provisional licences to set up refineries in different parts of the country.

But let me tell you that the process is not so easy as it has taken us years
to get to this level. Like I said, 18 companies applied for this licence initially and today, only Amakpe refinery has scaled the last hurdle and we are now fully on ground. I must commend here the role of Sterling Bank, as they have always been with us since we started the feasibility study for the project and till we got the bank guarantee from the U.S Exim Bank. That transaction was very successful as we got $10 million from the US Exim Bank for this project, and we give all the kudos to Sterling Bank for all their efforts.

We also commend the effort of the Akwa Ibom state government which has also invested the sum of $10 million in this project even as we as private investors too have committed several millions of dollars into the project.

Since we received the licence, the Federal Government and the Department of Petroleum Resources set certain conditions for us and I am glad to tell you that we have met theses conditions.
The first condition for us was to ensure 50 per cent completion of the mechanical aspect, that we have already surpassed within one year of getting the licence. As at June this year, we have met and even surpassed this particular target. We have also received a guarantee for that, the money we put on ground as a surety for meeting that target would be returned by the Accountant General of the Federation, having received the DPR’s pass mark in that direction.

So without the help of Sterling Bank, we wouldn’t have been able to go that far and we also have the assurance of the management that they are still very much with us in this quest to realise our goal. Our goal is to be able to refine 6,000 barrels per day in the first phase while we progress gradually to the full 12,000 barrels refining capacity for the second phase. We hope to hit the 12,000 barrels in two years and 30,000 barrels by the fifth year at most. In the seventh year, we should be looking at 50,000 barrels capacity.

The refinery is a modular form manufactured in the Houston, Texas, United States of America. It will be shipped to Nigeria and installed in Eket, Akwa, Ibom State.

Your experience in the setting up of the refinery

The process with the regulatory agency is very tough and you really have to spend so much time in gathering and processing all the necessary documents, there is a lot of paper work involved.
I think the government should make it possible for the banks to give loans and also guarantee huge ticket transactions such as this. This will make it easy for us to get these funds as no one could do this alone. For example in the United States, the government facilitates the establishment of refineries by assisting the private investors to do so. Our government in Nigeria can also assist by providing guarantees to the banks here who will also in turn, provide the necessary facility for the private investors who plan to do genuine business in the country.

I still remember about 25 years ago when I wanted to set up a private industrial firm in the United States, all I required was just a mere 10 per cent of the total sum. The government provided the required guarantee for the bank that financed the remaining part of the project. That is the type of assistance we need to really grow the Nigerian economy.

For me, I must state that without the help of Sterling Bank, which provided the required guarantee for the US Exim Bank, it would have been pretty difficult to talk about Amakpe refinery today. It would have been very difficult for us to move forward with a project like this.

Youth restiveness in the Niger Delta and its effect on the refinery

We are an indigenous company and we are part of the Niger Delta, as a matter of fact, I am a son of the soil and everybody supports this projects and it is what they have all been craving for. I can assure you that the people of the Niger Delta are really very interested in working with us on this project and they are very happy about it. They see it as an opportunity to really be part of the oil and gas process in that region.

One of the things we have realised is that the people of this area too need some form of participation, and this is a very crucial effort in participating downstream. When you cannot participate upstream, then this is an opportunity for a lot of players to come in and it is a very rare and good one at that too.
We have had occasions to host the governor of Delta State, Dr. Emmanuel Udughan on prospects of building four new refineries in Delta State with the assistance of Amakpe refinery.

In doing that, we have had the opportunity of going right into the creeks where the militants are and even in the deep waters. In that way, we know what they want, what their needs are and how to bring development to them. I think all we need to do is give them some level of opportunities and openings, they need to have a sense of hope and belonging, that of equal participation and I think they are ready to give up arms.

The DPR is really anxious to see Amakpe Refinery up and running, this will form a peg for others to hang on really. We are all waiting anxiously to see the project come to fruition.

Completion and production dates

As we speak, we have completed 50 per cent of the mechanical aspect of this refinery, and like I told you earlier, it is not the old types of refineries you find in Warri, Port Harcourt or Kaduna. It is a modular refinery and it is very efficient, compact and easy to maintain. It is a very modern refinery which will be shipped down to Nigeria and installed at the site. We will continue to build more modular components and add up as we progress, that is the beauty of this type of arrangement. If a component has a problem, the other one will still be working, it is a very good system that we have put in place.
On when we are going into full production, I can tell you that we should be able to do that exactly 12 months from now or even less.

This projects hopes to employ at least 250 Nigerians directly and another set of thousands indirectly. Because you are going to have independent marketers that will be directly and indirectly hooked to this project. As a matter of fact, when we did the initial ground breaking, we employed more than 500 people from the locality, even contractors trying to build estates.

Arrangements for crude oil supplies to the refinery site

Well, the Federal Government, when they issued us the licence, they also indicated their interest to give us the crude oil that is in Nigerian terms. As a follow up to this, we had a meeting with Exxon Mobil a few days ago, we gave them the necessary documents and they told us they are ready whenever we are set. We are working with Exxon Mobil because our site is very close to theirs at Eket.

Operating business environment in Nigeria

The Federal Government is very interested in this project and I think the enabling environment is improving such that we now have Amakpe and other refineries coming on stream in the country. Though it was not particularly rosy from the beginning, but we see a very bright light at the end of the tunnel. But the government still needs to do a lot more to encourage more investors with incentives and a better operating environment.

Estimated cost of the refinery project

There are so many stages involved in this project and the very first stage will cost us $79 million. There is also the pipeline and the tank farm which we are going to construct. The total cost of the 12,000 barrels crude refining capacity project including the pipeline should be at least $100 million for now, barring inflation and other incidental costs.

However, when we expand to 50,000 barrels of crude oil refining, then we should be talking of about $300 million. One good thing about this refinery, like I said earlier is that it is in modular form and we can always add more units to it whenever we plan to increase the production and refining capacity. So for now, the phase one will cost $100 million with a capacity for 12,000 barrels. The phase two will cost $300 million dollars and should be able to refine as much as 50,000 barrels per day.

Your background

I studied Biological Sciences form the California State University, California in the United States in 1976 and in 1978, I got Masters in Epidemiology or the study of diseases. I also worked for the United States Government for a couple of years before going to full time business. We have been involved in export and import for the part 20 years.

We actually concentrated in the export of consumer goods to many parts of the world and mainly we deal in supplies and repackaging of goods for and from the major US departmental stores to Europe, West Africa and South Africa and some other places.


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3 Responses to “Why we want Amakpe refinery to come on stream next year '”

  1. John Ikpeme says:

    Congratulations to a proud son of Africa, a proud Nigerian, a revolutionise Niger-Delta with the dream of making Nigeria a country with the blesiing and the ability to deal in truth its processing. ialso thank the bank for supporting a worthy cause, but dont forget that to whom much is given, much will be required. be a good custodians of the support and confidence which by good vision and good will you\’ve recieved.
    am looking forward to the dawn of your reality and the praise of time.-

  2. Akwa Enim Valentine says:

    congrats for making akwa ibom and africa proud wish you the best as you move on…

  3. mike ntuen says:

    More than 8 yes have elapsed and yet we have not seen any visible signs that the Amakpe Refinery is a reality. The proposed site at Eket remains thick forest. Promoters should convince Nigerians and Akwa Ibom people that the present generation will witness the operation of Amakpe Refinery in Eket

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