Executive Summary

This project aims to investigate the possibility of establishing One Hundred Thousand (100,000) barrels per day (BPD) refinery plant at the Olokola Free Trade Zone (OKFTZ) in Ondo State. This includes a detailed description of the market size, growth and segment; business environment, industry profitability in Nigeria, risk profile, risk management/mitigation measures and project economics etc.

Also, the report includes a description of the processes involved, operations and maintenance, health and safety, the equipment and the capital outlay, and the information relating to the production requirements and costing.

Furthermore, the study evaluates the cost, projections of production and associated income streams to demonstrate the economic viability of the proposal.

The project partners and Shayaz Nigeria Limited intend to operate the refinery plant in order to develop production capacity to supply energy (refined petroleum products) in the Nigerian market and neighbouring African countries. Once the system is established and branded, one option is to drive business growth through franchising to capitalize on the Ventech Refinery Plant advanced refining capability and human resource expertise, brand identity and marketing strength.

Finally, this feasibility report evaluates the commercial and technical viability of setting up a refinery plant in OKFTZ in Ondo State and in so doing, to clearly define those areas which will require further in depth appraisal and investigation. Along with suitable financial models, this report should give prospective corporate sponsors the means of critical appraisal concerning the potential success of such a venture, the likely return on capital, and the ability to repay or satisfy any loan /grant requirements.

2.0 Project Introduction and Background

Building refineries to meet the Nigerian energy needs have attracted attention as one of the potential means of guarantying security of energy supply in Nigeria and other sub African nations.

Nigeria, the most populous black nation in the world with a over 150 million people based on 2007 census estimate imports over 85% (500,000 Barrels refined petroleum products equivalent) of her daily refined petroleum products, in spite of the nation’s daily crude oil production of over 2 million barrels per day.

Considering the huge market opportunities and the relative insufficient local refinery daily production, the proposed refinery will be established under the Public-Private Partnership Initiatives, wherein the Local partners Equity Holding is 10% while that of Shayaz Nigeria Limited is 90%.

The project will entail the design, procurement, supply, installation, construction, management/operation of a full functional refinery with a fully equipped living quarters and recreational facilities.

The proposed refinery plant in OKFTZ in Ondo State of Nigeria will be designed and constructed in 2- modules of 50,000 bpd Plant each to process Nigerian Crude, but to be installed simultaneously. The Plant will be configured to produce the following products, amongst others:

Premium Motor Spirit (PMS)

Kerosene/Jet Fuel (DPK)

Residual Fuel Oil

LPG

The plant will be manufactured and operated in line with the Nigerian and United States environmental and safety policies and standards.

The Modular Refinery plant will be designed/configured to process 100,000 barrels of Bonny Light Crude/other Crude Oil grades in Unleaded Gasoline, kerosene/Jet Fuel, Diesel/AGO and Fuel Oil/Residue. Unleaded Gasoline with 90 RONC will be produced using Naphtha Hydrotreater/Catalytic Reformer Unit. The Refined Petroleum products will meet international product specifications.

The proposed Refinery at OKFTZ in Ondo State of Nigeria will be configured the aforementioned feedstock into refined petroleum product yields as follows:

1. Unleaded Gasoline 26,900 BPD- 26.90%

2. Diesel/AGO 25,200 BPD- 25.20%

3. Residual Fuel 30,400 BPD- 30.40%

4. Kerosene/Jet Fuel 12,600 BPD- 12.60%

5. Off-gas & Loss 4,990 BPD- 4.90%

Total 100,000 BPD 100%

The Refinery plant will be designed with an integrated power generation system to ensure uninterrupted supply of electricity. The generators (turbines) will be powered by the use of Light End Gas, sourced and recycled from the Off-gas provision stated above. The Refinery is scheduled to run continuously for two years without a complete shutdown, while routine maintenance will be conducted as the plant continuous operation. The Refinery will be shut down for one week to carry out a Turn Around Maintenance (TAM). The Refinery will then run continuously for another two years without further shutdown. After four years of operation, the refinery will be shut down each quarter to carry out a major TAM. 25% of the Refinery will be shutdown to carry out a major TAM for thorough inspection of Towers and Vessels which will minimize disruption to production.

This Feasibility Study will evaluate the opportunities inbuilt in establishing a Refinery plant in a typical Free Trade Zone in Nigeria. To this end, the Olokola Free Trade Zone (OKFTZ) in Ondo State of Nigeria will be critically accessed in order to know the basic infrastructures that will aid maximization of the proposed Refinery plant refined petroleum products distribution, marketing, profit maximization and value creation for the stakeholders.

More so, the profitability of a mega project such as the OKFTZ Refinery Plant requires understanding the market for the produced refined petroleum products. Therefore, we shall analyse the domestic (Nigerian) market for refined petroleum products, understand who our possible competitors are, explore the other available export market options and their consequences and know the best strategy to command our potential customer’s loyalty.

Of critical importance in this Feasibility Study, is the project associated risk assessment. We shall examine the feedstock security of supply risk, asset protection, plant Health, Safety and Environmental (HSE) polices and Fire Protection procedures.

Finally, we shall recommend on the best possible risk management strategies to ensure the successful operation of the refinery plant for optimal value creation for all stakeholders.

Date: 2015-01-29; view: 999