Added value in Ghana’s chemicals sectorJanuary 21, 2022
Edward Osei-Barnieh, managing director of ChemSolv Limited, talks to The Energy Year about factors driving demand for oil and gas chemicals supply and the company’s strategy for expansion and in-country value addition. ChemSolv is a Ghanaian company that provides chemical products and services to support drilling, completion and production.
What are ChemSolv’s most relevant current contracts in Ghana?
Our activity is focused on chemical distribution (specialty and commodity) and chemical management services (decanting or transfer of chemicals, filtration, storage, repackaging, application, etc.). ChemSolv has its headquarters in Accra and has a 3,500-square-metre warehouse situated on a 16,000-square-metre parcel of land in Takoradi – The Oil City – to support our customers in the region.
We have strategic partners in the speciality and commodity product supply business space. This enables us to serve our customers better.
We are working with some strong companies now. In 2021, we have been working a lot with Schlumberger for drilling and completions in sub-Saharan Africa. We are also working with Tullow directly on some projects, and through some of their contractors, Schlumberger, Baker Hughes, <a href='https://theenergyyear.com/companies-institutions/championx/’>ChampionX, Halliburton, etc., helping them with chemical supply, decanting (chemical transfer) and other chemical management services.
Through our Research and Development Department, we study the trends in the oil and gas business, especially the upstream sector of the industry. There is a strong study and new project with the power industry as well with support in boiler water chemistry which supports steam production.
In the downstream sector, we support the Tema Oil Refinery specifically with speciality products such as demulsifiers and cetane improvers. We also have products for the oil marketing industry.
Do you think it makes sense to revamp the Tema Oil Refinery?
Yes, we think it makes sense. Ghana is still producing oil. I believe they should revamp the Tema Oil Refinery or have another refinery for support. Tema Oil Refinery has a crude distillation unit (CDU) and residual fluid catalytic cracking unit (RFCC). We are eager to know when the refinery will be able to have an operation running without stoppages.
From 2019 to 2020, Ghana’s gas production jumped by 40%. How do you expect business to thrive in the gas segment?
The more production increases the more business we will have.
Our chemicals for production are mostly for asset integrity, production optimisation and flow assurance.
What is the company’s operational strategy?
We have an office in Accra which is our business unit and chemical facility in Takoradi for operations. It is a purpose-built chemical facility. This is where we decant, transfer chemicals, repackage, store and filter, etc. Chemicals are shipped to other countries like Senegal, Côte d’Ivoire, Equatorial Guinea, Gabon, Mauritania, Angola, etc.
Now, we have realised that the only way forward is to add value in-country by producing some of our chemicals locally. This is something that our R&D team and engineers back in Takoradi are working hard on.
We want to add value in Ghana. Local content does not have to end with just employing locals. Why can’t we produce like a lot of other countries do? This is what is driving us.
Are you still planning to install a local chemical blending facility?
Yes, we have changed our strategy a bit. We started doing a lot of things manually to see how it works. Every year starting in the last two years, ChemSolv has added a product that can be made in-country. We supply some speciality products that are made here. Clients only need to tell us what they want and the chemistry behind it, and we source the raw materials.
I recently travelled to Houston in search of blending plants. While this investment plan was delayed by the Covid situation, we are determined to start producing and add value in-country soon.
What is the company’s expertise in the handling of methanol?
Methanol is our stronghold among the commodity products. We import, store, distribute, manage and deliver it to customers. We supply methanol in drums, IBCs, ISO tanks or via ship-to-ship transfers. Our purpose-built chemical facility is equipped with all safety equipment, including but not limited to AFFF-AR fighting equipment, grounding points, automatic heat detection systems, wind sock, emergency shower and eyewash stations, etc.
What role does a company like ChemSolv play in cost optimisation?
We save our clients a lot of money. I will give you an example. If Tullow decides to buy a product from a company, and the company does not have a facility or the right people to work on the product, they will have to come to ChemSolv or another company like ours to buy it and then add a mark-up to our bill. Working directly with ChemSolv saves a lot of cost. We save cost through safe execution and quality of service.
What is the strategy behind introducing your services into the power sector?
There are a lot of power projects in Ghana which could be powered by steam, gas, or water. But how does steam, gas, or water get to the plant? Does it get there within the required parameters to be able to deliver the required output? This is what we are looking at. If it is steam generated without good-quality water, you end up using a lot of heat. That is energy, which is money. So, our job is to make sure that the water is of decent quality. Boiling and achieving steam at a correct point will not incur a lot of cost.
How do you manage training, knowledge, and technology transfer?
In-house, we have an incredibly good HR system. Our company is made up of multiple types of engineers and industrial scientists. If we want to do a project and we do not have local expertise, we might go to a strategic partner for instance, and have them train our people on that project. Or we send one person to be trained and then come back to train us all.
How is Chemsolv positioned within Ghana’s plan to become a petroleum hub?
Ghana has a lot to offer as a petroleum hub in West Africa. For example, looking at our tax regime in terms of imports, there is a temporary import regime. This means you can import an item as a temporary import, then move the item back out without paying duties.
This is what we are doing parallel to the development of the petroleum hub. We are bonding our chemical facility, so it will be a bonded warehouse. This means we are exempted from paying duty on products coming in beforehand. We can bring them in and only pay duty when we are selling.
That is good for our cashflow, and it is quite easy for the industries we sell to – for example, if we sell the product to Tullow, a company with duty exemption. If we import into our bonded warehouse, we can simply look at their exemption letter and declare an exemption for the chemicals required before selling.
What are your main priorities within the company’s mid-term strategy?
We are looking at growing into a full scope oil services chemicals company in the region. Moving beyond just distribution, we will manage chemical services contracts. We will have more applications in developing products.
The challenge is getting business because you need money to train, advertise and gain recognition. Right now, companies like ours need long-term commitments from operators and service companies to invest in technology and facilities. We are trying to create a chemicals hub, while Ghana is looking at a petroleum hub. Takoradi will be a hub first for West Africa, and then gradually, when we have proved that we can sell, we will move from there. We are targeting free zones in Ghana to have them lined up when we start producing.
How did the pandemic affect the performance of domestic companies?
The pandemic was a big blow to us because Ghana is an import and export economy. It created some fear for local companies in terms of their investment and expansion. We do not know what to expect in the next year, or even the next quarter.
Now, most local companies, including ourselves, are trying to diversify because in the past we were only focused on oil and gas. Now, we are trying to move into selling to power companies. We provide support with chemicals, but we are trying to get specialised products for the mining, pharmaceuticals, food and power industries.