Zenith Maintains Position as ‘Best Corporate Governance Financial Services’ in Africa in Fourth Consecutive Year
Pinnacle’s $1bn Terminal: The Power of Vision, Disruptive Innovation
The recent inauguration of Nigeria’s first offshore, subsea petroleum products terminal constructed by Pinnacle Oil and Gas Limited, not only represents a major landmark in the country’s petroleum sector, but also portends disruptive innovation in Enugu State, writes Gilbert Ekwugbe
A quote usually attributed to former President of South Africa, Nelson Mandela, says, “It always seems impossible until it is done.” This significantly explains Pinnacle Oil and Gas Limited’s journey to the zenith of Nigeria’s downstream petroleum subsector, particularly its latest exploit and Nigeria’s first offshore subsea petroleum products terminal commissioned by President Muhammadu Buhari at the weekend.
In inaugurating the facility, not even the President could hide his excitement, pride, and joy in this feat. He acknowledged the “massive investment and the obvious contributions it (the facility) has made to our overall economic well-being.”
He said: ”We have recognised that seamless supply and distribution of petroleum products is challenged by infrastructure deficit and complicated by the congestion in the Apapa areas of Lagos since the start of our administration in the year 2015. I am happy today that Pinnacle Oil and Gas limited leveraged the opportunities (provided by the administration) and established this massive terminal facility.
”I am happy to also note that further expansion works, which are starting will further provide incremental value, especially more employment to our teeming youth population.”
Throwing more light on the world class petroleum terminal, the founder and CEO of Pinnacle Oil and Gas, Dr. Peter Ndubuisi Mbah, explained: ‘‘Mother Vessels arriving at the facility will have the opportunity to berth at either of our two offshore berths. Either the Conventional Buoy Mooring (CBM), which is in 17m of water depth and can handle vessels of up to 120 million litres, or our Single Point Mooring (SPM), which is in about 23m of water depth and can handle vessel sizes of up to 200 million litres.
”These moorings are connected to our storage facilities by four networked pipelines of 40km total length. These pipe networks are designed to empty the vessels in a maximum of two days, a significant improvement on the previous duration, which could take up to 30 days.
”Our shore tank farm is currently able to handle up to 300 million litres of Premium Motor Spirit (PMS) as well as diesel or Automotive Gas Oil (AGO), and the facility is designed to permit rapid discharge into trucks for evacuation at a rate of up to 20 million litres per day.”
Presently, Pinnacle Oil and gas has no competition in respect of this facility because no marketer boasts of a terminal capable of taking a vessel size of 150,000 tons or a vessel size of 90,000 tons without lightering. Also, whereas the draft of a deep seaport is usually 14.5 or 15 metres and seaports with 12 metres equally considered substantial, this facility is a port of about 17 metres and 23 metres, respectively. Consequently, it can take all sizes of vessels, including the Suez Max, LR2 (Long-range 2), LR1 (Long-range 1) vessels, among others, without hassles.
The little beginning
Pinnacle Oil and Gas is today the leader of the petroleum downstream by volume and market share, commanding 23 per cent of the market share as against 5 per cent controlled by its closest competitor. However, like Amazon, which started from the garage of Jeff Bezos rented home and the Apple story, which started out in Steve Jobs’ garage, the huge success story that Pinnacle has become today started with just two staff in a one-room apartment. Mbah summed the story of the firm’s humble beginning in a June 13, 2022 edition of THISDAY Newspapers.
“Pinnacle commenced operations in 2008 and we started off in a one-bedroom studio apartment somewhere on Ahmed Onibudo Street on Victoria Island, Lagos. I started it off with about two other guys -one was my secretary and the other was my dispatch man. That was essentially how we started and what we did was largely the buying and selling of petroleum products. We bought and sold products from the terminals and we also got involved in looking at the movement of the market onscreen. “In summary, we started from that humble background, what you could describe as zero-base and of no reckoning, ”he said.
But even at that the vision bearer was clear where he desired the company to be, the reason he settled for the name, “Pinnacle” at the founding of the firm in 2004.
“Even from that humble beginning, we envisioned that we were going to play a dominant role in the petroleum products market in Nigeria. In the course of growth, the only thing that changed was that we moved the word ‘Nigeria’ to Africa because it got to a point where we felt that the Nigerian market was not going to be our limit.
“We knew that the downstream oil and gas industry was a matured market and we already had dominant players. The market was already distributed. The big players had already captured their shares in the market. The question then for us was: how do you become a dominant player in an already matured market? If you were dealing with an evolving market, a nascent market, it’s easier because everybody is struggling for a market size and companies are trying to capture different segments of the market. But that wasn’t where we were. We were in a space that companies had already taken their positions and had captured their various sizes. So, we knew that growing incrementally was not the option. We knew we needed to come up with a disruptive idea that would help us displace some of the dominant players and take that dominant position that we had envisioned.
“What we did was to look at the compelling business problems that existed. We observed that those problems, those challenges existed in the operations space. We observed that the industry relied a lot on multiple handlings of cargoes before they get to the end-user, and we felt because of the cost intensity of those multiple handlings, made it largely inefficient in terms of cost and time. So, we felt that the sub-optimisation needed to be disrupted, which was how we came up with this idea of eliminating those multiple handlings by creating what is known as an offshore intake facility, or if you will, what is also described as an SPM (Single Point Mooring system) and CBM (Conventional Buoy Mooring system). The best way to describe them is like an open seaport – a port in the middle of the sea. So, just like you have ports for dry cargo by the shore, the difference with this is that we had to do a subsea pipeline of about 40km network of pipelines.
“It is subsea, so it’s beneath the seabed. These are complex engineering that require a whole lot of data and survey in order for you to even commence the design. But we knew that this was radically going to change the face of the industry. So, it took our attention away from those huge trading that our colleagues were doing at the time because we knew that ultimately, it was going to be a quantum leap once we got it right. So, we persevered.
“To cut a long story short, by March last year (2021), we operationalised one of the mooring facilities – the CBM. That became operational in March 2021, and by September, what we had envisioned became a reality. That is clear 10 years from 2011 when we got the concession from the Lekki Free Zone to do the SPM, “he said.
Meanwhile, the expected completion of some refinery projects to take Nigeria’s refining capacity to about 1.4 million barrels per day in a few years will boost rather than diminish the need for the facility. With its bidirectional capability for both import and export or receiving and loading back products, it is a resilient infrastructure that complements rather than competes with the refineries.
A disruptive manifesto
Clearly, the meteoric rise of Pinnacle Oil and Gas to the zenith of the already mature downstream subsector lies in the power of vision and disruptive innovation. Mbah does not believe in bandwagon, for according to him, a company that seeks exponential growth must do something differently and radically.
“For us, incremental growth was not the way for us. We needed that quantum leap, that exponential growth and what could bring it to bear was disruptive innovation: doing things completely different and not doing it in a conventional way. So, what we did was largely a disruptive innovation, which enabled us to capture the market share, ”he explained.
Since charity begins at home, Mbah, who is the governorship candidate of the Peoples Democratic Party in Enugu State for the 2023 election, is also poised to replicate the Pinnacle phenomenon in his home state. he has unveiled an ambitious manifesto promising, among others, to take Enugu’s Gross Domestic Product (GDP) from $4.4 billion to a minimum of $30 billion, build 10,000km of roads, and pursue a zero per cent poverty headcount index.
To the doubting Thomases, he said: “Before we jump into conclusion as to whether it’s possible to grow the Enugu economy from $4.4 billion to $30 billion, you have to look at what we have done in the private sector to give credence to what we are saying. It will require not incremental growth as I said, but will require taking disruptive decisions, doing things that are creative, making Enugu State the preferred destination for investors, for businesses, for living and also for tourism.
“I recall, when we brought in some resource people to train us (at Pinnacle) on strategy, we expressed to them how we wanted to grow our revenue then from N29 billion to N600 billion annually. They thought it was mad, that it was only crazy people that could imagine such a thing, because you don’t grow at that rate. If you did a 10 per cent growth rate, you are a first star company, but growing from N29 billion to N600 billion is like growing at more than 150 per cent per annum. However, today, we have beaten that number. We are not even at N600 billion; we are well above that.”
In a country where leadership appears left in the hands of career politicians, the entrance of a prolific entrepreneur, former Chief of Staff and Commissioner for Finance into Enugu’s governorship race, no doubt, presents the State with a massive opportunity for uncommon transformation.