A semi-annual annual ‘Report by the Secretary-General on the activities of the United Nations Office for West Africa and the Sahel (UNOWAS)’ disclosed that oil-related crimes cost Nigeria a whopping $2.8 billion revenue loss in 2018, from attacks on oil installations, maritime crime, and piracy which are a threat to peace, security, and development in the region.
The figure not enough, oil companies in the country are also faced with the challenge of being able to control the value chain of their products, monitoring what comes into the 200km-long Trans Forcados Pipeline in transporting crude oil to the Forcados Oil Terminal where they are exported. However, it has always been a ruse as they cannot accurately predict the barrels that come out for export due to various reasons.
Chiefly among the reasons was the often regular vandalism of the pipelines by Niger-Delta militants which result in technical delays by the pipeline operators -largely Shell and to a lesser degree Agip.
While most oil companies overlook and go on with business as usual, bearing the losses grudgingly, one of them believes that things cannot continue with the same trajectory and seeks to find a proprietary solution. The challenge is huge enough that it drains the nation’s oil revenue which could have spurred higher infrastructural development.
This led Nestoil limited to develop a system called Alternative Crude Evacuation System (AES) to finally curb oil theft in the country and grow the revenue base of the country.
The Alternative Crude Evacuation System (AES) is a process where the regular downtimes caused by technical issues to the pipelines carrying crude oil, and vandalism done on the pipelines across specific routes recorded through the use of flow lines or the TFP which make oil producers unable to meet export targets, will be negated through another method of evacuating the oil by barges.
With the modified system and facilities designed and built by Nestoil Group of Companies and its affiliates, the liquid that comes out from the wellhead has four constituents – oil, water, gas, and sediments known as wet crude, and the wet crude needs to be processed to get export grade crude oil but in the first step, the processing wet crude oil is fed into a 3-phase separator where sediment, oil, water, and gas are separated with the crude further fed into an electrostatic heater treater where it is further treated to remove gas and water to meet export requirements (dry crude).
The ready-for-export dry crude is then pumped to the loading platform where it is stored in a dump barge/Vessel. Shuttle vessels come to load the crude and transport to the FSO Ugo Ocha offshore, where buyer’s vessels load the crude. This process bypasses crude handling charges and potential theft through the TFP.
Ifeanyi Ezuka, Chief Technical Officer, Neconde Energy Limited, a subsidiary of Nestoil said the innovation is the latest testament to Nestoil’s growing reputation as an innovative company that constantly seeks proprietary ways of working in difficult terrains and also borne out of necessity due to the downtime recorded on Forcados terminal when moving their products there.
Elucidating the importance of the innovation to the country’s oil industry, he said the usual losses or leakages associated with pipeline issues are eliminated, meaning that they now have control of the complete value chain to deliver specific volumes from the well-head to the terminal. Also, bankers now take them seriously than before because they know and appreciate the certainty of their operations, while there is also a significant drop in redundancy.
The challenge of developing the system, he posited, was a combination of technology, logistics, and resilience as they looked at the fundamentals of what is required to be able to carry it out rather than putting it on a pipe, then they put it on a barge and send it out. So from the technical side, what are the type of barges needed? What is the draft of the river? How deep is the river from there to where they want to go? What are the terminals around those that are the closest? So how far is where they are to the closest terminal? So all of those technical assessments and analysis they got right.
The other challenge, Ezuka said, was the regulatory approvals that will be needed. “So who do you need to talk to get approval? What kind of approvals do you need? Particularly when it comes with a very new space even the regulators will 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 are required to put the responsibility to that activity that you want to do.
“We engaged the communities too and you have to do all of these to be a responsible corporate citizen to deliver this but with all of the people in that space explaining to them what you want to do. Also on the list, the Navy and the military as well because you carrying crude, they need to be able to understand that you are not one of the bunkers, that you’re carrying a legitimate crude, and you’re going to get the required approval”.
He said other oil firms have started to take notice and have reached out to them on how to leverage on the service and they are ready to deliver the Alternative Crude Evacuation System (AES), which includes the crew dehydration, the loading platforms, the vessels, and all the controls that are required within 14 to 18 months for those that want to build theirs which is very expensive and might have effect on the cost of operation.
“We are also ready to collaborate, synergize and provide the same service to those that needed us to help move their products using the system, which will be a plus for all as it saves overhead cost they could have expended on building theirs”, he added.
Aside Nestoil’s pioneering efforts to see to the end of crude oil theft, the company in its quest to be the local partner of choice through the provision of innovative services is about to complete the construction of OB3 river crossing, the East-West gas pipeline, which is the longest and deepest underwater pipeline in sub-Saharan Africa, which will go a long way to re-enforce its brand name as the King of Swamp in the oil sector.