Nestoil was incorporated in 1991 and we are Nigeria’s largest indigenous Engineering, Procurement, Construction and Commissioning (EPCC) Company in the Oil and Gas sector.
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Everything that we do is guided by our commitment to establish and follow the highest standards in our industry.
Discover first-hand insights from our thought leaders and how we’re working to meet Nigeria’s growing energy demands.
What led to this innovative leap?
Sometimes in February 14, 2016, we were on a trajectory to growing our production to 60,000 barrels of oil per day and we were excited that we had crossed 50,000-mark heading towards 60,000. The next thing we heard was that the Trans Forcados Pipeline has gone down and we thought it was a regular hitch, but on a closer look after inspection and couple of verifications, we understood it was the export line from the Forcados terminal that actually went down and the needed assessment showed that it was going to take a while before it would be fixed in terms of the technicalities required to repair it. And in terms of the social issues around the facility at that time, it showed that it was going to take a while.
It eventually took about 16 months before that pipeline could come on stream, but when we realised that it’s going to take a while, we didn’t know how long at that point, and Shell wasn’t coming up with specific dates.
It was at one of our operations meeting that one of the team members, I must tell you it didn’t come from me; so it might not be right, probably, to say I’m the focal point for alternative evacuation. One of the team members said one of the companies around town was carrying their crude through barges to vessels that are over 50km away ; but ours were over 200km away from theirs. So, we thought possibly we can learn something from them as the TFP was not working. We then decided to take crude through barges, no matter how small, to at least start selling something. We’re producing 50,000 barrels and our mindset was that if we could push 5,000 barrels via this medium, it’s better than complete zero situation, which means no revenue.
So, two options were available to us: It is either we go down as abusiness considering the situation or we carry our crude on barges. We took the decision and started conceptualising it from the day that idea was put on the table, which was about a month after the pipeline went down. We eventually had the first set of production from the crude going into the barges, which was about four months of planning, conceptualising, thinking by most of our engineers who are petroleum engineers, before we all turned into marine engineers within the space of two – three months. This is because we needed to understand that space to be able to play successfully. There were a lot of ups and downs, but here we are; we’ve learnt the way it works.
No doubt, you encountered some challenges developing this. What was you experience as the team lead?
Really, it is a combination of technology, logistics and then resilience. Science and engineering are very basic across board. So, we were basically engineers first of all (petroleum engineers) before we became marine engineers. We looked at the fundamentals of what is required to be able to carry this out rather than putting it on a pipe; then put it on a barge and send it out. So, from the technical side, we had to decide on the type of barges we needed. What is the depth of the river? How deep is the river from there to where we want to go? Where are closest terminals around? How far is where we are to the closest terminal? So, all of those technical assessments and analysis we had to do right; so, that’s the first technical side and I must tell you that playing in this country is the other side.
Then the next thing is the regulatory approvals that you will need. So, who do you need to reach to get approval? What kind of approvals do you need? Particularly, when it comes with a very new space even the regulators you know want to be very careful not to over regulate. So, it then requires a lot of collaboration from you explaining to the regulators what you want to do to the point that they understand and then they’re able to also work with you on the regulations that is required to put responsibility to that activity that you want to do. So, we did that collaboration and got to deal with so many regulators to be able to get around these. So, we dealt with the Department of Petroleum Resources (DPR), Nigerian Ports authority (NPA), Nigerian Maritime Administration and Safety Agency (NIMASA) and others.
We engaged the communities too and you have to do all of these to be a responsible corporate citizen. To deliver this with all of the people in that space, you need to be explaining to them what you want to do. Also on the list, the Navy and the military as well because we are carrying crude; they need to be able to understand that we are not one of the bunkers, but that we are carrying a legitimate crude. The required approval is needed here. So, all of that space you have to put in a system, which is the system of alternative evacuation because if you are to put crude on a pipeline, you don’t need the Navy, but now you’re carrying it on the barge in the Inland water, which is the way some of our sisters and brothers carry the other one that’s gotten illegally. You have to make sure that everybody can understand that you are in a legitimate business and it requires some kind of engagements.
Another factor to the success is that we were a very agile team. We made sure that we fill the place with people that have the level of agility that we needed and our agility is the speed of our response and to think and believe in what we do. The key thing in agility is that it’s a shared wish, everyone knew that we wanted to carry crude on barges and wanted to sell it and get money. So, even the t company’s cleaners knew that the only way money comes inside here is through selling crude oil. So, anything you’re doing that is not helping to sell crude oil, you’re playing a fake game. We said it so consistently that everybody knew that we had shared vision; and the next thing is that we progress. What portion of this vision is mine and then you make sure that portion of vision that is yours is not let down because if you let it down the next guy that will take on the baton will struggle.
How does the technology work?
I would rather call this a system other than a technology. You can call it an alternative energy evacuation system; so, it is a combination of technical things and a lot of logistics things as well.
For most companies that are in the onshore area, we have major export routes. We have two that are managed by Shell; one by Chevron and the other one by Agip, which are three terminals.
So, we have the Forcados terminal, the bonny terminal, you have brass, then you have Escravos. So, these have major trunk lines that go to those terminals that carry crude from the inland and then go to those terminals. The challenge is that the pipelines that carry all these crude sometimes 200,000 barrels, flow through that pipeline going to the terminal offshore. Those pipelines are target for social issues.
Again, you want to be sure that you have control over the value chain, and that’s what we guarantee.
So at what stage is the system deployment?
We’ve been at full deployment since June, July last year.
Are these facilities developed by Nestoil Group?
Yes. In the Nestoil Group, we have companies that fabricate these vessels, we have companies that did engineering, and so through our subsisting company called Impac engineering, we did engineering of the systems from scratch. We did the detailed engineering and then handed it over to our fabrication company, Energy Works Technology (EWT).
So, EWT fabricated the systems and then we transported everything to the field based with national integration capability. We were able to install and integrate. We got one equipment – the crude oil dehydrators from the international markets that we bought from the United States and Nestoil installed and integrated the dish. Our team again, the engineering team went through the process of commissioning those facilities.
Can there be disruptions?
We’ve got layers of redundancies that even when there’s disruption in one vessel, we have another vessel, which covers for that. So, you are sure of delivering a certain volume which is why any businessman wants to have control of its value chain from first point a to the end.