‘My vision is to transit from oil to manufacturing’

ABDULRAZAQ ISA is the Chairman, Waltersmith Group, an integrated indigenous energy company with interest in upstream, refining and power. On the heels of the recent commissioning of its brand new 5,000 barrels per day Modular Refinery in Ibigwe, Imo State, Isa spoke with a select group of journalists about the project. Excerpts:

Let’s start with the journey so far. How did you get to this point?
After a total of about 10 years consistent banking career, I transitioned from there into my first company which is Safe Trust Mortgage Company and it was while in Safe Trust that we decided to make a foray into the oil and gas industry because it was the dominant industry in Nigeria and we decided that we needed to get into that space and it was in that process that we formed a company called Waltersmith & Associates which midwifed Waltersmith Petroman Oil, a joint venture between Waltersmith & Associates Nigeria and Petroman Oil, a Canadian company. That company led to what is called Waltersmith Petroman Oil today. That is the company that made the foray into the oil and gas industry. In 2003, we won a marginal field called Ibigwe Marginal Field which is now being operated by Waltersmith Petroman Oil Limited. On the back of that, we also founded Waltersmith Refinery & Petrochemical Limited and that is where we are today.

Congratulations on the successful commissioning of the refinery project. What is your vision for Waltersmith?
My vision for Waltersmith is for our company to transition from oil into manufacturing. That is my long-term vision ultimately. It is not going to be one or the other. It is going to be both running concurrently, so we will have oil production activity and also be fully involved in manufacturing. When I talk about manufacturing, it is manufacturing related to oil, petrochemicals, chemicals, pharmaceuticals and food processing. Essentially leveraging oil into enabling an environment for competitive manufacturing where manufacturing is going to happen not just for us but also for third parties who will come onboard and co-locate in that environment.
To achieve this vision; first, we want to reach 100,000 barrels per day (bpd) in production over the next 10 years. That is going to come in participating in asset divestment opportunities, farm-in into assets, marginal fields bid opportunities as they come along and also looking for assets around Africa. That is on the exploration and production side.

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In terms of refining, we are looking at 50,000bpd refining capacity which will be in 3 modules; 5,000bpd, 25,000bpd and 20,000bpd refining capacity respectively. We are also looking at power generation using gas and renewables. We are looking at 500MW; 300MW will come from gas power plant and 200MW will come from solar energy particularly in Northern Nigeria where there is a lot of solar energy available. We are also looking at gas development – 250mscfd as part of our exploration activities.
Finally, we are looking at setting up an industrial park around Ibigwe area which will also be in phases. We are starting with Phase 1 on about 50 hectares of land and we are doing that development in conjunction with United Nations Industrial Development Organistion (UNIDO) and United Nations Economic Commission for Africa (UNECA) – those 2 UN agencies are collaborating with us to develop the industrial technology hub. I believe that in the next 6 months, we will finish all feasibility studies for that project. The project is currently being adopted by those agencies as part of the country programme in association with Federal Ministry of Trade & Investment.

What do you see as the long-term benefit of your vision?
With the development of the industrial parks, companies that use hydrocarbons resources as input can then come and co-locate with us and leverage with the oil that we produce and add value – these will include petrochemical, pharmaceutical, chemical, food processing companies – all of them can come and collocate within the complex because we have the infrastructure and facilities to enhance and support their production activities and make them very competitive.
What we see in a long term is the benefit that will arise from African Continental Free Trade Agreement that Nigerian government is participating in and one of the key elements of that is a strong manufacturing sector. What we will like to see is how to leverage oil to enable manufacturing so that we can take the benefit of the big market in Africa; produce efficiently, competitively, leveraging our natural resources that we have and export these products to the rest of African countries and beyond. That can be done by ensuring that every barrel of oil we produce, we add value to it and ensure that it is technically consumed in Nigeria because once you facilitate consumption of oil, you increase significantly the overall GDP of our economy. Oil production by itself does not create jobs but once you produce the oil and you take it through a process, you are adding value in the process and that value addition leads to creating jobs, increase in skills of our people and that impacts the overall GDP.

How sustainable is the refinery project?
The long-term sustainability of this project will definitely require some measure of support from government. I can say confidently that we have gotten to where we are today with the support we received from government in the beginning. The acquisition of the Ibigwe Filed was a government initiative to increase the level of local content in the Nigeria upstream industry and we feel pleased that we are one of the companies that have made success of that government policy. With the support of government, we have initiated something on our own to try to add value to the crude that is produced in Nigeria through this modular refinery concept. Again, we feel pleased that we are one of the companies that have played a role in trying to make a success of another government policy but we also want to take that step further by going from a modular refinery to a full-scale refinery of 50,000bpd. In order to achieve this, we are going to need more government support to have access to the crude feedstock we need, the business and policy environment that will facilitate that.

We anticipated government successfully. We feel that government will deregulate the market which they have done just in time when we started our own refinery. We are actually a step ahead to meet government aspirations. Based on our track record of making a success of marginal field program, making success of modular refinery programme and government desirous of increasing local refining capacity, we have totally keyed into that government initiative and we are determined to make a success of the government policy to increase domestic refining capacity. To achieve that, government must also support us strongly.

What kind of support are you expecting from government?
First, I must acknowledge the full support we have received from the Department of Petroleum Resources (DPR). They have been there for us from the beginning; from the project concept stage to execution and to operations. We have received all the licenses we required from them: license to establish, construct, operate – all of those licenses they issued on time as at when we needed them and they have held our hands all through the process.
One of the key elements to the sustainability of our project is access to feedstock – it is critical. For now, we are using our own feedstock from the Ibigwe field and it is a marginal field but we have made this significant investment to build this infrastructure to provide petroleum products in Nigeria. The field itself on which it stands cannot sustain this and for us to achieve all of these aspirations going from 5,000bpd to 50,000bpd, we will require a number of things from raising the financing that we need, having access to feedstock, demonstrate to the financiers that we also have access to equity reserves that is going to be available for the refineries which brings me to our long term 10-year aspiration as a company in exploration and production business which is to achieve 100,000bpd oil production through different mechanisms – divestment, opportunities that may come along, farm-in, marginal fields. These are sources where we feel we will have sources of feedstock to drive the 50,000bpd refining capacity. So, we are looking up to government to support us as an indigenous company helping to realize government aspiration. Our engagement and discussions with the Nigeria National Petroleum Corporation (NNPC) on different opportunities within the industry to enable us and facilitate access to some of these resources we need for refining will continue and we will continue to enlist the support of government to ensure that these things are realized for a long time.

What is your relationship with all the stakeholders along?
The Nigerian Content Development and Monitoring Board (NCDMB) who are joint venture partners in this whole process have been awesome – they took the risk and shared the risk with us. They also have the aspiration to increase the Nigerian content in the industry and they saw us as a company that have demonstrated capacity and capability to add value to the hydrocarbon industry and they joined us and decided to co-invest in this project. That is how they took 30% equity interest in this project and they are also looking at participating with us in the expansion that we are looking to implement.
We also have the Africa Finance Corporation (AFC) who provided a secured credit facility for this project which facilitated the implementation of this project. The contractors – the consortium of V-Fuels and Lambert Electromec have also demonstrated capacity to deliver on the project. As a matter of fact, they delivered before the deadline. It was just the COVID-19 pandemic that disrupted our ability to commission. This plant should have been commissioned in May 2020.

One key stakeholder that has been very supportive is the community – they are critical to the overall sustainability of this project because if you do not have the trust and good relationship with the community, you cannot have your license to operate and because we have operated in the community in the last 12 years, we have been able to deliver on our corporate social responsibility (CSR) – once we agree on things to do, we go ahead. We are like partners. Many of these plans will not materialize if we do not have an excellent working relationship with the community. The community is a major anchor of all the things we want to do. Since we have major investment plans for that area from refinery, industrial park and attracting industries to come and co-locate where we are, it is important for us to have a very enduring relationship with the community and that I believe we have.

The state government – Imo State and the local government, Egbema, who are our shareholders in the upstream side of business have all been supportive of what we are doing and we continue to count on their support.
We have a clear strategy of carrying everybody along. The Federal Government through the office of Minister of State for Petroleum Resources – is fully interested in what happens here. He has consistently assured us that access to feedstock is not going to be a challenge to us and we are very appreciative of his support.