An integrated and modular energy modelJuly 21, 2021
Akintoye Akindele, CEO of Duport Midstream Company, talks to The Energy Year about the company’s energy park development and the market gaps this model will fill. Part of the Iman Africa Energy Group, Duport Midstream is developing an energy park in Nigeria with a modular refinery, gas processing plant, CNG plant, storage terminal and power plant.
What gaps does the Nigerian energy industry suffer from and how are less conventional models making up for them?
The oil and gas sector in Nigeria appears to have underperformed given its potential to create a strong and diversified economic base. Since the discovery of oil in Oloibiri back in 1957 and despite presently being the eleventh-largest producer of crude oil in the world, Nigeria remains a major importer of refined products.
It now does appear that for many years, the major international exploration and production companies operating in Nigeria demonstrated a preference to merely extract our hydrocarbons for export. There was very little investment in local developmental capacity for refining and monetisation of Nigeria’s crude and gas.
Clearly, the pathway to building an enduring oil and gas sector involves deliberate government policies driving the development of robust local infrastructure like refineries, natural gas processing and pipeline construction and the encouragement of local participation in the oil and gas industry.
But the Nigerian government has taken note and successive administrations have responded with policies and strategic private sector-led partnerships known as PPPs to channel the urgently needed investment into infrastructure and technology.
The Nigerian Content Development and Monitoring Board (NCDMB) and the state-run oil corporation and regulators, the NNPC and DPR respectively, have actively supported and encouraged new players to make investments in the oil and gas sector.
Technology has also resulted in the emergence of modular refineries and power plants, which are now filling a crucial gap within the industry value chain. These interventions, actively supported by government policy, have succeeded in creating a new generation of bold and empowered entrepreneurs deploying cutting-edge technologies and international best practices to build the local industry and successfully unlock the multiple gains of integration within the oil and gas industry.
We have moved from a centralised architecture, based around large-scale hydro plants or refineries, to a distributed system where efficient modular refineries and power plants are driving increased local participation in the sector.
How is Nigeria’s refining landscape changing and what new business model does Duport Midstream propose?
The advent of emerging modular technology driven by the government desire to provide an investor-friendly enabling environment is attracting capital and resources to the sector.
The industry regulator, the Department of Petroleum Resources, is doing a phenomenal job with policies and procedures aimed at deepening investment and interest in hydrocarbon extraction and processing.
Duport Midstream and its parent company, Iman Africa Energy Group, have been emboldened by the business-friendly policies created by DPR and with their support and guidance, will continue to invest heavily in last-mile refining capacity with modular refinery projects in Edo State and Bayelsa State, both set for commissioning within the next nine months.
This is considered a major milestone given the speed and professionalism demonstrated by the team at Duport, in active partnership with their regulator, to deliver on these refineries. We intend to continue to scale our operations upwards using modular technology that enables us to compete effectively and meet the needs of a vast underserved market.
We have built a competitive edge as a low-cost producer as our integrated approach enables the use of shared infrastructure and derived economies of scale. Our overall strategy lies in the efficient deployment of low-cost integrated energy parks engaged in the production and sale of refined products and natural gas, as well as power generation and distribution.
What are the details of the first energy park Duport Midstream is building in Nigeria?
Duport Midstream is building the first truly integrated energy park in Africa, located in Egbokor, Edo State, Nigeria. The park will operate in phases, a 10,000-bpd modular refinery and crude distillation unit and 1,400-bpd naphtha stabiliser, a gas processing facility with a capacity of up to 60 mcf [1.7 mcm] per day and a compressed natural gas (CNG) plant with a capacity of 10 mcf [283,200 cubic metres] per day.
The park also includes an embedded power plant – presently 5 MW but scalable to 50 MW. The plant presently provides power to the site and plans to provide its excess power to the local communities bordering our Energy Park. We have also installed a Tier 4 Data Centre, the first of its kind in Africa, enabling us to provide data storage and communications facilities in a secure manner.
The Duport Energy Park obtains its feedstock crude and gas from Summit Oil OML 42 acreage, from where we constructed an extensive grid of feed pipelines to convey the crude and gas to our facilities from the field. We also constructed a 4.7-kilometre offtake pipeline flowing our processed gas into the NGC pipeline network at the tie-in point close to our park.
The Duport Energy Park also provides a 30,000-tonne refined product storage terminal with tanks for crude, naphtha, kerosene, AGO [automotive gas oil] and HFO [heavy fuel oil]. We also have a dedicated truck terminal from where our refined products are lifted and delivered to our offtakers anywhere in the country.
What is your short-term strategy for constructing energy parks in Nigeria?
Our parent company, Iman Africa Energy Group, will build a minimum of five energy parks in the country over the next five years, strategically located in underserved economic hubs. We expect the first two to be commissioned within the next nine months and will deliver a minimum of an energy park annually from 2022.
To ensure uninterrupted flow of crude oil and natural gas to act as feedstock to our Energy Park, Duport Midstream bid for and was recently awarded joint ownership of a marginal field, Ekpat, which would ensure the company has enough products to feed its refineries and gas parks.
We have built a strong and robust partnership with our original equipment manufacturers (OEMs) in Dubai, South Korea and the US. These are well respected international players in the oil and gas industry and have ensured we have received and built reliable and high-quality plants and refineries.
We have also deliberately encouraged the use of local content where possible and are ensuring that technology transfer for artisanal and professional roles is assured. In partnership with the NCDMB, we have always pushed for an increase in local participation in our processes and operations pre- and post-construction. We are also partnering with our OEMs to build a manufacturing yard in Nigeria to support existing operations and position Nigeria to be a manufacturing and support base for these refineries and other oil and gas engineering equipment and parts.
Do you plan to replicate your energy park business model in other African markets?
Duport Midstream and Iman Africa Energy Group are presently engaged in advanced talks with the governments of Ghana and Uganda, where our processing of land and licences to operate energy and gas parks is already advanced. We also have a small stake in a 10,000-bpd refinery for the Liberia and Sierra Leone markets and have begun talks on building a 30,000-bpd refinery in Guinea.
The demographics and business rationale lend credence to the need to provide these parks and products to what are huge and captive underserved markets where our industry know-how, our funding capabilities and business network can be very useful in developing these international markets.
In summary, we intend to replicate our integrated and modular energy park model across key markets in Africa, providing a steady supply of refined petroleum products and natural gas, and plan to build a minimum of 10 more energy parks across Africa within the next five years.