By Adewale Sanyaolu
Distortions in the downstream oil industry that led to the acute shortages of petroleum products across the country has been attributed to lack of commensurate investment to support industry demand
Founder and Chief Executive Officer (CEO) of Pinnacle Oil and Gas Limited, Mr. Peter Mbah, who the assertion recently observed that inadequate nvestments in the downstream of the oil and gas sector was to blame for incessant petroleum products’ scarcity being experienced around the country.
With recurring bouts of petroleum products scarcity, especially petrol, across the country, there have been controversies and buck-passing between regulatory agencies and petroleum marketers since the menace began.
Commenting on the issue on the sidelines of a thank you visit to President Muhammadu Buhari at the State House, Abuja, the Pinnacle Oil boss attributed the crisis to a deficit of investment in the downstream sub-sector, a problem, which he said his firm, had started resolving with the inauguration of the largest storage terminal in West Africa in Lagos last year.
Asked about the possibility of fuel scarcity easing off soon in the country, Mbah said more investments in the downstream oil and gas sector would in a matter of time end the scarcity.
He said: “There has been a deficit of the sort of investments Pinnacle has done in the last decades, but what we’re doing right now is to address that stagnation of investments in the downstream oil and gas industry.
“As you know, this is an investment size of about $1 billion. So we are expecting to see more of such investments because what the Pinnacle has done is to create some efficiency in the supply and distribution value-chain of the downstream sector.
“So we are indeed expecting that more investment in the downstream sub-sector would completely eliminate the sort of scarcity you are witnessing today”.
According to him, the facility’s’ activities had lowered costs and improved the distribution of petroleum products to many areas in the country while also easing traffic on the Apapa area of Lagos and providing valuable job opportunities for many Nigerians.
“We, Pinnacle Oil and Gas Limited, have come here today to express our profound gratitude and our heartfelt appreciation to Mr. President.
“You will recall that on the 22nd day of October, 2022, Mr. President inaugurated our storage terminal, adjudged to be the largest storage terminal in West Africa, with offshore intake facilities, also adjudged to be the deepest intake facility in the entire Africa, sitting at a water depth of 23 meters.
“So we do have SPM and CBM. Those are the offshore facilities we have. Those facilities have the capability to in-take the largest vessels you can imagine and discharge over 100 million liters of clean petroleum products within 24 hours. This is typically what takes the industry 30 to 32 days to discharge.
“So we have largely come here today to express our gratitude to Mr. President for the honour he gave us in inaugurating this largest facility, which has actually changed the face of the industry, because it has eased, as you know, this facility is located at the Lekki Free Zone, just by the Dangote Refinery,” he said.
Mbah added: “So what it has done, it has eased the congestion and the gridlock we have at the Apapa area in Lagos. It has also reduced the costs of supply and delivery of petroleum products in different parts of the country. It has also provided jobs for teeming unemployed Nigerians.
“So this is why we thought it necessary to come and say thank you to Mr. President.”
Nigeria’s quest to attain energy security and efficiency again caught the attention of President Muhammadu Buhari during the recent inauguration of the $1 billion Pinnacle Oil and Gas FZE ultramodern offshore subsea petroleum intake and offtake terminal at the Lekki Free Zone in Lagos. Buhari at the event restated that the “Provision of energy security remained a cardinal points of our administration.
We have recognised that the seamless supply and distribution of petroleum products is challenged by infrastructure deficit and complicated by the congestion in the Apapa areas of Lagos since the start of our administration in the year 2015,’’.
The president’s statement was inline with the stance of the Group Chief Executive Officer (GCEO) of the Nigerian National Petroleum Company Limited (NNPCL), Mallam Mele Kyari, who at a recent a live interview on Arise Television, stressed the need for Nigeria to develop a framework on energy security in order to diversify its sources of petroleum products supply and secure all such sources.
According to him, the massive population of Nigeria, where 70 per cent of the people are predominantly youths, poses a challenge to the energy security of the nation.
“For example, when there is a minor scarcity of petrol, it affects several things and several people because of our large population size and shortage in the supply chain of petroleum products. So there is a need to secure our sources of petrol supply at all times, which calls for the need to develop a framework where energy security is guaranteed.
Relief for Apapa gridlock
President Muhammadu Buhari while inaugurating the Pinnacle Oil and Gas FZE Terminal disclosed that the operations of the facility have eased congestion in the Apapa area, and reduced the cost of delivery of petroleum product distribution to many parts of the country.
The president congratulated the Chief Executive Officer of Pinnacle Oil and Gas Limited, Mr. Peter Mbah, for establishing the massive terminal facility and providing hundreds of jobs to Nigerians.
Buhari described the investment as a demonstration of the success of his administration’s agenda to transform the nation’s economy, adding that the federal government looks forward to many more investments of this magnitude.
He reiterated that the federal government would continue to encourage and support investors to take advantage of the ongoing reforms in the oil and gas sector as enshrined in the Petroleum Industry Act (PIA) and replicate the feats achieved by Pinnacle Oil and Gas Limited.
Some of the stakeholders at the inauguration ceremony maintained that the facility would significantly transform Nigeria’s downstream sector having addressed the challenges hitherto experienced with multiple handlings associated with discharging products from mother vessels through Daughter vessels with attendant delays, high costs and gridlock in Apapa.
For his part, Governor of Lagos State, Mr. Babajide Sanwo-olu, said the Pinnacle terminal in the lekki Free Trade Zone was another landmark private sector investment in Lagos State “What this means is that vessels that wouldn’t come around here, 90,000 deadweight (DWT) tons, and 150000 DWT can conveniently berth here and discharge their products effectively within the minimum turnaround. There is no need for smaller ships to be deployed to transfer products to and from larger vessels which was often very necessitated at many other parting locations, which I’m told can take as long as 30 to 45 days.
On the other hand, the direct transfer that is possible here can be done within a maximum of two days,” he added.
In addition, the Lagos Governor noted that the facility could store up to 300 million litres of refined petroleum products, maintaining that by all standards, “this is an impressive, audacious facility built to the highest standards available anywhere in the world.”
According to him, what is even more interesting is that, it’s only the first phase of a larger plan that is out there, which will have a capacity to store as much as a billion litres of petroleum products.
Facility to halt N5billion daily loss
Mbah said with the infrastructure the company has put in place, it had been able to address the delays in evacuating products in mother vessels that come to Nigeria.
Mbah also explained that the extra costs companies pay and the reduction in revenues that should be made through Custom Duties and Excise Duties as well as revenues to the Nigerian Ports Authority (NPA) have also been addressed.
He noted that one of the major benefits of the facility was to help to decongest the Apapa and the roads by reducing the time in evacuating products in mother vessels and increasing turnaround time, thus significantly eliminating demurrage and waste due to inefficiencies in the value chain.
“I read one time in your reports that the country was losing about N5 billion daily because of that gridlock in Apapa. That’s because we are unable to evacuate dry cargoes that are in the port.
“The implication of that is, if you cannot move the dry cargoes, you cannot bring in new vessels. So the earnings that government was supposed to be making from Customs duty and excise duty and the NPA fees and all that stalled.
“And then, the fees to pay for Nigeria-bound vessels went up almost 10 times because those vessels will reckon with the fact that when they get to our waters, they will have to wait for several days before they are allowed in. And they will pass that cost to Nigerians,” Mbah said.
According to him, with the reduction of the gridlock in Apapa, when the company’s facilities begin operations, there would be free movement of dry cargoes.
“Those vessels that would ordinarily wait for days if not months before they come into our port will be reduced, the number of waiting period will be reduced. It will impact on the freight costs.
“Also, the revenue of the government both the Customs and NPA will also be enhanced because you know the fast movement of those cargoes. So that’s how it impacts the economy,” he maintained.