Nigeria to save ₦37.75bn as Oando tackles petroleum discharge bottlenecks

Nigeria is expected to save about $120 million or ₦37.75 billion in demurrage annually, following Oando Plc’s construction of first mid-stream jetty in the country.

The novel infrastructure, which is the downstream sector’s first in decades, will provide a more efficient platform for product receipt to all marketers currently using the Major Marketers Association of Nigeria, MOMAN, jetty.

It will ease the plight of oil marketers’ as the facility, which has a half-kilometre subsea pipeline, and a 16″ 3km onshore line, is capable of delivering over three million tonnes a year.

The jetty has berthed its first cargo, MT Falcon Nostros, a 22,000-metric ton cargo vessel, following statutory checks in Lagos. Product discharge was said to have lasted two days in line with design parameters, and validates the jetty project with regard to overall design, integrity of the jetty platform, pipelines, integrated systems and resulting operational efficiency.

Speaking at the maiden berth, Chief Executive Officer of OVH Energy, Oando’s downstream licensee, Mrs. Olaposi Williams said: “This maiden vessel is further proof that the jetty’s entire integrated product discharge and receipt systems can support requisite operational rigours.

“This remarkable milestone heralds the next phase of planned activities, which include completion of pipeline connection to various terminals in line with communicated connection plans, commercial contracting with MOMAN and other customers as well as an upgrade and development of Terminal 1 and the Marshalling Yard.”

The jetty has been identified as an immensely valuable initiative developed by Oando as it will allow 45,000DWT vessels to berth and discharge their products without lightering and demurrage.

According to Williams, the subsea marina jetty will also contribute significantly to the company’s overall net profit as a result of tolling fees and substantial cost savings on imports and demurrage, while ensuring an increase in the utilization of existing storage space, and significant reduction in delays caused by infrastructure constraints in the Lagos area.

She explained that the 127 jetties in Nigeria have proven insufficient to service the needs of the country, posing a major challenge for imported vessels trying to discharge at the port.

“The fuel jetties at the Apapa Wharf are incapable of accommodating large volumes of fuel imports, with maximum vessel size restricted to between 18,000MT and 20,000MT. Hence, every 30,000MT vessel that berths at the Apapa jetty must be lightered into a daughter vessel at an extra cost to the marketers of approximately $245,000 per lightering operation.

“Furthermore, over $120 million is lost annually to demurrage, as every vessel that berths at the Apapa jetty has a waiting time of between 14 to 21 days, incurring a demurrage of between $280,000 to $420,000 per operation. Major fuel importers now have a preference for discharging their products outside Nigerian waters, specifically at the ports in Cotonou, Benin, Niger Republic and Lome, Togo,” she added.

Infrastructural constraints continue to have a significant impact on the distribution of petroleum products, with 70 percent of Nigeria’s domestic petroleum products demands being met through petroleum importation.

As at 2016, Nigeria spent 2.5 trillion Naira on the importation of refined petroleum products according to data from the Nigerian Bureau of Statistics (NBS), making it the 7th largest petroleum importer in the world.

($1 = ₦314.65)

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