Tunde Afolabi

Petrochemicals are easy to sell. It is easier to raise money when you have an offtake.

Tunde AFOLABI Chairman and CEO AMNI INTERNATIONAL PETROLEUM DEVELOPMENT COMPANY

Amni’s gas-powered growth

November 28, 2018

Tunde Afolabi, the chairman and CEO of Amni International Petroleum, talks to TOGY about the company’s upcoming projects, the outlook for an FLNG project and workforce challenges in the market. Amni International Petroleum Development Company is a Nigerian exploration and production firm that operates OML 112, OML 117 and OML 52 in the country.

What were the key developments for Amni International in 2018?
Amni has simultaneously embarked on a series of new projects. We are looking to spend USD 3 billion-4 billion in the next three years. It is a very busy time for us. We are building a refinery with a 50,000-100,000-barrel-per-day processing capacity. We are building a petrochemical plant with a capacity from 500,000 tonnes to 1 million tonnes of propylene and a power plant with capacity of 500-1,000 MW. All these projects are going on simultaneously.
Our goal is to achieve full utilisation of our gas. Amni has the largest gas reserve among the indigenous companies in Nigeria. We have P1 gas reserves of 3.4 tcf [96.3 bcm]. For all those projects, we are not looking for anybody to source the raw materials. The petrochemical plant requires about 125 mcf-200 mcf [3.54 mcm-5.66 mcm] of gas per day. The power plant requires another 200 mcf [5.66 mcm] of gas per day. Our plan is to build a 750-mcf [21.2 mcm] gas processing plant. Oil is secondary to gas for us. We are pursuing gas projects and reserves to make sure for the next 25 years, the company will be able to grow. We have oil for the refinery, gas for the petrochemical plant and gas for the power plant.

How will these projects be financed, and what are their timelines?
We are in talks with the International Finance Corporation, Afrexim Bank and a few other financial institutions in order for them to participate in the debt and equity portions of financing the refinery, the petrochemical and the power plant projects. Offtakers of the end products will also play important parts in funding the projects.
Petrochemicals are easy to sell. It is easier to raise money when you have an offtake. You can raise sometimes up to 80% debt.
We have started applying for licences for the refinery. We are preparing an MoU with a company that might construct both the petrochemical plant and the refinery. It is better to have them built at the same time; they’ll have an efficiency multiplier effect on each other. The gas that comes from the refinery can be used at the petrochemical plant.
We have advanced quite a bit on the power plant. EY is doing most of the market surveys as to the buyers of the power, possible partners and financing for us. To complete all these projects will take up to three to four years. The refinery will be ready in two years after the FID. But the journey of a thousand miles starts with the first step. We are taking these first steps now

Which are the key ongoing projects in terms of field development?
We have the ongoing Okoro field extension in-field development. Two wells are being drilled right now with Shelf Drilling through the end of 2018.
At the same time, we are also looking at developing the Setu field, which we discovered about 14 or 15 years ago. It is a small reserve, 5 million barrels. Two wells are projected to be drilled there around Q2 2019.
We have also completed the FDP [field development plan] on Tubu which has been approved by our partners, NNPC, on OML 52. We hope to get first oil by Q2 2019. Tubu has seven old wells, but the technology of drilling in those days was not the same as today’s. To deplete the reserves efficiently, we need brand-new wells. We are going to drill between six and seven new wells. That will start at Q1 2019
This is being financed by our USD 260 million reserve-based loan facility that is co-ordinated by Shell and Afrexim Bank, which will hopefully be increased by USD 150 million by Q1 2019 in order to complete our Tubu field.

 

How strategically different is the focus on your different assets?
At Okoro we are limited by the size of our FPSO. If we drill the two wells and we’re pushing 40,000 barrels of liquids, then we would not have the capacity. We have to wait to bring those wells in as we shut in some high water wells. The idea is to focus on drilling Setu and Tubu. Okoro is declining. You can open up the first well. As it declines more, you can open up the second well. We can produce Okoro for another five years.
The Ima field has lived its life. We are still doing 1,000 barrels per day, just to keep the platform going. That is the same platform we are going to use for Tubu. It keeps our operations economical.
We have 1.8 tcf [51 bcm] of gas in Ima. That is what we are going to start with first, to feed the projects we are planning. We will supply them for 12 or 13 years, then bring Tubu in behind it. We are building up to where we are producing 500 mcf [14.2 mcm] of gas per day from IMA and later add 300 mcf [8.5 mcm] per day from Tubu subsequently. Both of them can be operated at the same time. We are putting the capacity in to process 750 mcf [21.2 mcm] of gas per day. We will end up with excess capacity.

Do you have any updates regarding the installation of an FLNG?
The FLNG project is still a possibility. The initial consideration of the FLNG was to use it to take the gas from our fields in IMA Terminal to the Lekki free trade zone, but looking at the cost of the whole process, using pipelines is a lot more economical. It is considerably more expensive to move the gas by LNG – about USD 300 per 1 mcf [USD 10,6000 per 1 mcm] compared to USD 0.50 per 1 mcf [USD 17 per 1 mcm]. For USD 600 million, we can build a pipeline that can transport the gas. It also saves money on the FRSU to degasify the LNG.
But the LNG option is still open. We still have about 200 mcf [5.66 mcm] that we can use if we want to produce LNG.

Are you interested in acquiring any new fields?
We are talking to some companies that may have some marginal fields that we can develop. We could reach 100,000 barrels per day by 2020. The growth from 15,000 to 100,000 barrels is quite a bit. We know we have Tubu already, which is going to bring in 20,000 to 25,000 barrels. We have Okoro that is going to grow from 15,000 to 22,000 barrels. That leaves us at 47,000. If we are successful with the ones we are talking to people about, we could close the deal by the end of the year. We are really fast in developing small assets. We can ramp up these new productions very quickly.

What are the key challenges that Amni International is currently facing?
Our biggest challenge now is manpower. Oil and gas development has always been our bread and butter. But we are now venturing into different and new territories. We need to focus on project delivery. It is about making sure we have people that can take us through a 2023-2025 timescale. It is that manpower development strategy that has to be solid for us not to stumble. We have to manage the relationships with contractors, bankers and the host community.

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