Sunday, November 6, 2011

Orient Refinery Fully Operational End Of 2012, Says Anyaoku

By Marcel Mbamalu and Geoff Iyatse (Lagos) and Chuks Collins (Awka)

* Targets 2000 Jobs



* We've Gone Ahead Of Other Private Refineries 

ORIENT Petroleum Resources (OPR) -Refining and Petrochemicals Ltd, has given the indication that its refinery would be "up and running" by the end of 2012 when the envisaged completion of the refinery installation would have been completed.

Giving this assurance, while delivering a speech at the 2011 Annual General Meeting of the company in Awka, Chairman of the Board of Directors, Chief Emeka Anyaoku, said this would include the overseas procurement and shipment of long-lead items and on-site fabrication of storage tanks.

According to the reverred diplomat, Orient has completed the acquisition process, including the perimeter and topographical surveys of 240 hectares of land at the refinery site in Anambra State and another 21 hectares at Lokoja, Kogi State for stand-alone petroleum products depot expected to serve the central and northern parts of the country.

Other activities already concluded include the geotechnical, geological and hydro- geological surveys at the refinery site, site civil engineering works, including clearing, leveling earthworks prior to construction of internal roads, reinforced concrete plinths for installation of refinery equipment and detailed engineering and fabrication.

Orient, which has interest in oil and gas exploration, production, petroleum products refining, sales and exports, had, in its notice of AGM 2011 that was sent to its shareholders, disclosed that all works listed above "have been fully paid for, except balance of equipment cost prior to shipment."

Anyaoku confirmed that, all things being equal, the company would, indeed, also begin crude oil production and sales next year.

He, however, gave a breakdown of fundamental issues, which have direct or indirect consequence on the company's performance up to the end of August, 2011.

He said after the Federal Government granted Orient the Licence to Establish and the Approval to Construct its 55,000 bpsd refinery in 2002 and 2004, respectively, the company had gone ahead to obtain the Environmental Impact Assessment (EIA) Certificate for its refinery in 2005, and by so doing became the first private refinery in Nigeria to obtain such an EIA Certificate.

He disclosed that, to provide additional insurance and security for crude feedstock supply, the Federal Government had granted to Orient on sole risk basis, two oil blocks, OPL 915 & 916, which are very close to the location of their refinery.  They have, since receiving the two oil blocks, been conducting the necessary exploration and production work to ensure timely provision of crude feedstock to the refinery.

The company decided early in 2011 to fast-track a staged development of its two oil blocks, OPL 915 and OPL 916 by initial completion and production testing of one of the already drilled oil wells and 3D seismic data acquisition.  This staged oilfield development is expected to generate cash flow to support the financing and early completion of the refinery, which is a capital-intensive project.

Meanwhile, Managing Director of the company, Mr. Nnaemeka Nwawka, an Engineer, told journalists that Orient's activities had gone way beyond controversy and is ahead of other private refineries reported to have lost their operational licences. He asserted that Orient's remains valid and intact.

Nwawka told The Guardian at the company's office in Awka that the company's operations have gone far beyond the level of meeting licensing terms and conditions, and it as the company is already set to commence actual oil and gas production and crude oil export within the next few months, preparatory to the completion of its refinery at the end of 2012.

Nwawka stated that when that phase of the company's operations takes off completely, it would provide hundreds of high networth direct jobs and ancillary services.

He commended the supportive efforts and encouragement of the federal ministries of Finance and Petroleum, both of which, he claimed, have shown great understanding.   He said the downstream sector is generally desirous of having government's proposed incentives for private refineries gazetted and implemented as a way of stimulating meaningful activities and programmes.

The Orient boss added that the proceeds from the initial sales of the produced oil and gas would provide early cash flow and boost financiers' confidence to fund the acquisition of the outstanding refinery modules and auxiliary equipment.

Still on incentives for effective operations, Anyaoku said government's economic and structural reform continues with efforts to curb inflation and improve reliability of basic infrastructure, improved expenditure on which he believes the stock of nation's external reserves is declining.

"The price of Nigeria's Bonny light grade," he said, "averaged $62.20, $80.90 per barrel, for 2009 and 2010, respectively. The Gross Domestic Product (GDP) grew by 7.72 per cent in the second quarter of 2011, up from 7.4 per cent recorded in 2010."

The nation's crude oil production, he stated, stood at around 1.9 million and 2.47 million barrels per day (bpd) by year-end 2009 and 2010 respectively and is expected to increase slightly with the passage of the Petroleum Industry Bill currently before the National Assembly.

Anyaoku also sees the planned removal of fuel subsidy by the Federal Government as one of the expected ways to help correct a lot of distortions in the economy, including the pressure on the exchange rate.

The former Commonwealth Secretary General commended the strength of the new Economic Management Team set up by President Jonathan, describing it as a clear demonstration of the priority being placed on the improvement of the country's economy.

He told the shareholders that the ongoing political stability in the country has been an important boost in the continuing investor confidence enjoyed by the country.

Anyaoku, however, bemoaned the security question in the nation and hoped that the accelerated efforts by government to address the challenges would soon begin to yield positive results.

Taking a look at the future with optimism, the board chairman said Orient remains committed to maximising shareholder value and will continually adapt its business model in the challenging economic climate, to ensure that progress would be made in the coming months that will position the company in the path of profitability.

The company, he pointed out, would review the overall results prior to recommending a dividend after it would have commenced sales at the end of 2012.