•It’s construction cost about USD 150 million
In this interview, the General Manager of ASPM Limited, a subsidiary of OVH Energy, Mr. Deji Osikoya, talks about the recently launched Lagos Midstream Jetty and how it is designed to radically transform Nigeria’s petroleum downstream landscape. Adedayo Adejobi writes
Tell us about the Lagos Midstream Jetty
The Lagos Midstream Jetty is West Africa’s first privately owned mid-stream jetty, designed to increase the vessel delivery capacity and off-loading efficiency of petroleum products at Apapa Lagos. It was conceived to bypass the infrastructure bottlenecks experienced in the Apapa axis thus eliminating the lightering and demurrage charges currently being incurred by marketers.
The facility has a draft of 13.5 m, LOA (length overall) of 210m and capacity to receive 55,000 displacement vessels and has the design capacity to discharge at up to 800 m3 (cubic meters) of petroleum products per hour, operating 24 hours a day / 7 days a week to supply products into storage facilities situated at Apapa, via a 3 km pipeline network to be linked directly with over 200,000 MT storage belonging to major and independent marketers in Nigeria. It has a monthly volume capacity of up to 240,000MT.
How much was invested into the construction of the Jetty?
The jetty was constructed at a cost of about USD 150 million. This novel piece of infrastructure is set to transform the receipt of petroleum products into the country and create sustainable efficiencies within the Downstream sector. We estimate that this new addition to the African oil and gas landscape will save marketers over $50 million annually; increase receipt capacity, efficiency in product discharge, reduce vessel waiting time as well as promote synergies amongst marketers.
Why a Midstream Jetty?
The existing Apapa Jetties are fraught with several bottlenecks which in most cases results in excessive demurrage, lightering and other shipping costs. To better address your question, I will approach it from three (3) major issues we set out to resolve.
First – Draft constraints: The current Apapa jetties are significantly limited with respect to their drafts which averages about 7-10m and as result they can only receive vessels of about 25,000 MT in capacity. This results in loss of economies of scale for marketers.
Second – Requirement for lightering of larger vessels into smaller vessels: Owing to the existing draft constraints erstwhile mentioned at the Apapa jetties, vessels supplied with larger content of 37,000MT and above have to be lightered or transhipped into smaller vessels before delivery to marketers. This lightering operation is estimated to cost petroleum marketers over $33 million annually, and potentially passed on to every user of the product buying at the retail stations.
Third, excessive demurrage costs: Excessive demurrage fees are one of the main challenges facing marketers at the Apapa jetties. On the average, vessels waiting to berth at the Apapa Jetties have to wait between 7 to 21 days before berthing for discharge into the marketers depot or storage facility can take place, thus most vessels are already on demurrage even before vessel discharge commences. Demurrage costs to petroleum marketers are estimated to be over $26 million annually.
What makes this jetty distinctive?
The Jetty has a 2.2km X 16” pipelines potentially connected to over 200,000MT of storage; it has 800,000L/hr. discharge capacity; the Length overall (LOA) of the Jetty is 210m. The Jetty is equipped with environmental pollution prevention system designed to forestall spills into the Lagoon and other world class safety systems.
The Jetty is also equipped with a safe vessel berthing aid system and a gangway tower to facilitate vessel product discharge operations. At the construction of the Jetty, we took into consideration, world class environment and safety standards, which was why we built the automated firefighting system in accordance to the NFPA-30 standard. There is an Emergency Shut-down valve in accordance to API 6FA to shut down operation in the event of an emergency. The Oil Water Collection system of the facility is in line with the international standard of API 608 and its fire resistance was designed in accordance to API 6FA.
The facility also has a sophisticated weather monitoring system which has the capability to monitor the weather conditions in real time.
All of these operational considerations were put in place as a demonstration of OVH Energy’s commitment as an organisation to zero incidences in our business operations.
The Lagos Midstream is monitored and operated from an on-shore control station at Alapata, Apapa which serves as the central control centre for its off-shore and on-shore operational activities fully equipped with an automated process control system.
What does Nigeria Stand to benefit from the Lagos Midstream Jetty?
The economic benefits of OVH Energy’s Lagos Midstream Jetty is enormous. Over the past 3 decades, marketers have spent approximately NGN1.6 Trillion ($4.5 billion) on lightering, with 90 percent of this spend flowing out of the country. Today we have delivered a first class piece of engineering that meets global standards, the first of its kind in sub-Saharan Africa and will be of invaluable benefit to the industry and nation at large in curbing this overhead. It is therefore safe to say that the Lagos Midstream Jetty will help Nigeria to recover over N1.4 Trillion ($4 billion) hitherto lost on lightering to other countries.
Petroleum marketers had consistently faced the very expensive discharge of products into Apapa ports which eroded their profits. Sometimes it costs oil marketers an average of $900,000 to discharge petroleum products, more than it costs to ship a cargo of products from Europe. The LMJ is designed to eliminate these challenges. The new facility will also enable cost-savings within Nigeria’s downstream sector of over $50 million as a result of increased receipt capacity, efficiency in product discharge and reduced vessel waiting time, ultimately eliminating demurrage and lightering requirements.
This project comes as a welcome relief both to the oil sector and the entire country, considering the estimated $60 billion required to develop oil and gas infrastructures. The Jetty will unlock job opportunities, wealth creation and strengthen economic development across the country.
Nigeria currently has 127 jetties which have proven insufficient to service the needs of the populace. This insufficiency has led to major fuel importers discharging their products outside the shores of Nigeria, specifically at the ports in Cotonou, Benin, Niger Republic and Lome, Togo. I believe the Lagos Midstream Jetty is about to change this. We are set to witness a boost in the delivery of petroleum products to terminals around the Apapa axis and the nation at large.