By Marshal Gungubele

The 750,000Barrels of Crude Oil Capacity Onshore Terminal under construction by  Green Energy International (GEIL), the Nigerian independent, is rising above the ground, in Otakikpo, eastern Nigeria.

It has been only nine months since the foundation of the project was laid in October 2023 and CAKASA, the EPC contractor, is on track to conclude the onshore segment of the facility before the end of August 2024.

CAKASA is overseeing the work of a number of subcontractors, finalising the construction of the accommodation, administrative area for 120 personnel, office for 120 personnel, installing the Tanks, the Lease Automatic Custody Transfer(LACT) Units ( oil and gas equipment used to sample and measure oil so it can be transferred from one company to another); the Pumps, the Generators and everything else.

The Terminal is expandable to a handling capacity of 1.5Million Barrels of crude.

“We’re building 23kilometres of pipeline into the ocean, because at the depth, we’ll be at about 25kilometres, that’s the depth at which the export tankers can berth and load”, explains Kayode Adejulugbe, GEIL’s Chief Operating Officer (COO). Companies will pump their crudes into the terminal from where they go for export through the pipeline.

Construction of the offshore segment, which ensures that crudes that arrive at the terminal are delivered into vessels in the Atlantic Ocean for export, has been slightly slower than the onshore work. “Our offshore equipment landed in May 2024 instead of March 2024 due to reasons that are often frustrating”, says a source at GEIL, “but we have commenced installation of the components -pipeline, PLEM (Pipe Line End Manifold, a subsea structure acting as a connection point between the main or branch pipeline) and Buoy- in July, which was a difficult decision, being the height of adverse weather, though it is strategic. We were  installing the PLEM as of mid July 2024

“Weather forecasts looked good, so we could get traction on the pipeline lay…And WAV, the offshore installation company, has done a superb job of managing the risks, while maintaining steady progress”.

The project’s main remaining challenge is the 23Kilometres of subsea pipeline, “but we are undaunted by it”, Adegbulugbe explains.

IF THERE IS ANYTHING THAT THE GEIL TERMINAL WILL HELP MOST TO MITIGATE, it is the crude evacuation crisis in the eastern Niger Delta. Some 20 fields, located within a 30 kilometre radius of the Otakikpo field, operated by GEIL, “cannot produce because they cannot evacuate”, notes GEIL’s Founder/CEO Anthony Adejulugbe, himself a retired professor of energy management.

But why?

If you’re a marginal field operator in Nigeria with output of no more than 5,000Barels of Oil Per Day and you’re located between 10 and five kilometres to the coast, you would barely be breaking even. “You are always incurring cost of storage tankers, cost of tugboats, and costs of gun boats among others. This means that, the moment your production gets below a certain limit, your costs of production per barrel is unsustainable and that’s probably why you see a lot of marginal fields along the coastline that are less than 10km to the coastline stranded”, says the COO.

And what happens if you’re upland? This much has been severally reported by Africa Oil+Gas Report:  The  three crude evacuation pipelines in eastern Nigeria are in various stages of sub performance. The Trans Niger Pipeline TNP remains partly out of work, the Nembe Creek Trunk Line (NNCTL) is permanently shut down and the Ebocha Line remains impaired. What this means is that, for example,  Waltersmith Petroman,  and Seplat East, whose fields: Ibigwe and Ohaji respectively, are located in Imo State, on the eastern flank of the delta, are still unable to pump their crudes into the TNP, despite the line being fully available to operators downstream (like Aradel and Heirs E&P).

When completed, the GEIL Terminal will be the first Onshore Terminal to be constructed by a homegrown Nigerian company.

All the  five onshore terminals that Nigeria has, were established by multinationals and as we write, are still being operated by them. Established in 1989, the Escravos terminal is operated by Chevron. Shell operates the Forcados and Bonny terminals while Agip operates the Brass terminal. In terms of capacity, Qua Iboe, completed in 1971, is the largest onshore terminal in Nigeria with a capacity of 8,520,000 (Bbls). It is operated by ExxonMobil. These terminals, along with their offshore counterparts, are responsible for providing close to 95% of Nigeria’s foreign exchange earnings and about 80% of its budgetary revenues. The National Bureau of Statistics reported that the oil sector alone contributed 6.63% to the country’s total real GDP in Q1 2022.

“We came into this industry to be a shining example”, says Professor Adejulugbe. “We wanted to do things differently, things that we are going to be proud of and one of that is Capital stewardship: how we spend money. We want to drive down the cost per barrel to around $12 and a major part of that is tackling the cost of evacuation.

“The terminal and export infrastructure is in line with the strategy to develop an efficient evacuation/export system at Otakikpo, thus reducing overall OPEX $/bbl. We also plan to make the Otakikpo field a crude processing and export hub by providing access to fit-for-purpose evacuation and export infrastructure for the several stranded fields in the Eastern Niger Delta area. There are over 20 stranded fields in close proximity to the terminal that will benefit from the enhanced access to readily accessible and cost- effective route to the market”.

So there.

The Terminal is part of what Kayode Adegbulugbe the COO, has christened  ‘the Green Energy 2026 Story’, which, he says,  “may not have been possible without the impeccable efforts of a number of  Nigerian organisations, including Fidelity Bank, which supported the company structuring a loan of $250Million for both the our two phases of our project (both the terminal and the earlier two well drilling and completion campaign) in record time of less than eight months. This is a most unprecedented feat”.

External inflow for project financing such as this has been withering away steadily since the propagation of climate change by environmentalists took root. So GEIL took advantage and leveraged on its “Nigerianess” by fortifying the bond and business relationship with local service partners.

The  GEIL’s COO is particularly enamoured of the contribution of CAKASA (the engineering facility installation firm), which came up with Vendor financing.

“That helped us reduce the debt that we would be needing from the lenders and it gives them comfort to know that somebody else is willing to take some of the risks on our behalf and it also fosters a very deep relationship because once we can get this done. Apart from them providing funding, it also reduces the project management interface because now we are dealing with only one contractor that would supervise all the other contractors that works with them”.