Nigeria’s marine sector grows with the gas marketFebruary 22, 2023
Aminu Umar, managing director of Sea Transport Group, talks to The Energy Year about the impact of Nigeria’s Decade of Gas on the marine sector.
How do you anticipate the Decade of Gas will impact Nigeria’s marine sector?
Most African countries on the Atlantic have untapped gas reserves that will be explored in the future. The gas market is expected to become quite large. A clear consequence of this will be the rise of LNG-powered vessels. Modern ships are eco-engine ships, and some of them are LNG- or dual fuel-powered.
The coming NLNG Train 7 will increase LNG cargoes to Africa and Europe. We expect that all of the new LNG tankers coming on stream from 2024 onwards are going to be LNG-fuelled vessels. As these tankers enter the market, it is likely that there will be new demand for LNG bunkering. The entire world is in need of gas, and Nigeria is positioned to play a key role here.
How would you evaluate the mission of the Nigerian Ports Authority (NPA) to automate every port by 2023?
It is a welcome development and is something that needs to be done. Our vessels operate in different ports worldwide and the Nigerian ones present the most bottlenecks and inefficiencies. The biggest challenge is the human interfaces because they create delays and congestion, leading to safety problems for our assets. Automation will ease security problems, spurring growth and investments in the Nigerian marine sector. Investments are much needed, especially in the equipment that assists vessels in coming in transit.
Nigeria is supposed to be the hub for the West African region, but our volume of trade must be encouraged. The African Continental Free Trade Agreement and the upcoming Dangote Refinery will seriously increase the movement of goods in Nigeria and the NPA needs to position itself properly to be able to capture this emerging market.
Can you give us an overview of Sea Transport Group’s energy-related activities?
Sea Transport is strictly a shipping company, and we are the largest indigenous shipowners in Nigeria, with 12 tankers. We do crude evacuation, operating tankers for both clean petroleum products (CPPs) and dirty petroleum products (DPPs). We operate throughout the West African region, but our main focus is Nigeria because 70% of the cargo movement in the region is located here.
We have made history by being the only indigenous tanker owners to operate outside the continent. We presently have assets operating in the Mediterranean and Black Seas. We have worked in Spain, Italy, Greece, Germany, Libya, Lebanon and Romania. The Black Sea is an interesting market and we are positioned to take advantage of this region.
How would you describe the company’s environmental approach?
We want to reduce our carbon footprint, and, in partnership with NIMASA [Nigerian Maritime Administration and Safety Agency], we are making efforts towards carbon capture. We have opened our assets to third-party inspectors to actually verify our carbon footprint. We want to be sure that we meet or even exceed the IMO [International Maritime Organization] standard.
We also offer a service called Clean & Green which ensures that residues and harmful materials are collected in a special waste filter unit connected to an ROV, and then disposed of in an environmentally friendly manner instead of being discharged into the sea as is done using traditional methods.
How is the IMO 2020 regulation affecting your day-to-day business operations?
The IMO 2020 mandates the use of low-sulphur fuel, but this doesn’t affect us as we were already using it. It has been a bit expensive for us to operate here because there is little refining capacity, and the refineries operating locally have not been able to change their processing systems to produce low-sulphur fuel. Nigerian crude is a low-sulphur, so whoever refines this crude is already meeting the targeted ratio. Dangote, which is an upcoming modern refinery, will be able to produce a low-sulphur fuel like any other international refinery.
What is Sea Transport Group’s value proposition?
We always operate with utmost professionalism and integrity. We have set this standard for many years, so everybody in the industry knows that Sea Transport stands for these two values. We believe that the business we do is a business of trust. When taking cargo from anyone, it is a trust issue. We ensure that we will always provide that trust. We don’t want any issues related to that. That has been our culture over the years and is what has helped us grow to our current level.
How central is local content development for your company?
We have developed a lot of capacity in Nigeria, especially human capacity. We are the pioneers of bringing in female seafarers. We train them from cadetship up to being ship officers. We have done that over the years, and truly, we are proud to say that it has succeeded.
We are already in discussions with a European company called Interorient Shipmanagement to expose young Nigerians to international seafaring jobs. We are going to structure it in such a way that it will be an incentive. If someone performs well on our fleet here, they will be able to go to the international fleet. We will keep championing many other attempts in the shipping industry to develop local content.
What is your growth strategy?
We want to expand our footprint in the gas market. Our two-year plan is to start moving into the LPG market, and the five-year plan is to move into the LNG market. We are also involved in alternative crude evacuation, which has given us the opportunity to look into requirements for FSOs and storage tankers. We are currently in the process of acquiring FPSOs. We are open to working with investors, whether international or local.
How is Sea Transport Group planning to take advantage of the African Continental Free Trade Agreement?
The African Continental Free Trade Agreement will open up plenty of possibilities in dry cargo movements by opening up intra-African trade borders. We have seen many inquiries regarding this, as well as cargo building up. We believe this trend will continue, and as ship owners we are already doing a feasibility study to see whether we want to invest in dry cargo in addition to wet cargo.
Additionally, we want to invest in the container trade within African countries. We want to be there when the market starts to roll. The Dangote Refinery will also kick-start wet cargo movements because Nigerian export volumes will grow massively.
What have been the main drivers that have enabled you to grow outside the continent?
We have been able to develop our capacity over time in a steady and effective way. By doing so, we saw that we were ready to expand significantly and we wanted to begin operating internationally to grow even more. Europe has high standards and a level playing field for all companies.
Our motivation was the knowledge that if we were able to operate in Europe, we would be able to operate anywhere. Our growth there has been facilitated by our European partnerships who secured our knowledge and local expertise. Today, we are operating in conjunction with Interorient, and we cherish this collaboration.
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