By Anthony Uche
Since 1978 when the idea of using some refinery by-products as feedstock to produce petrochemical products was conceptualized, the nation has continued to grapple with efforts to add to the number of petrochemical plants in her fold. A number of petrochemical proposals have been announced in recent years only to be cancelled due to political and security issues. According to Business Monitor International, BMI’s 2011 report, long term political and structural factors will continue to hold back the nation’s petrochemical industry over the medium-term with little prospect of significant investment in the sector over the next five years. In fact, the most promising development, being the US$2.5bn methanol-to-olefin (MTO) project, scheduled for start-up in 2012 with capacity of 1.3mn tonnes per annum (tpa) of ethylene and propylene, 2.5mn tpa methanol, 400,000 tpa of polypropylene (PP) and 400,000 tpa of high density polyethylene (HDPE). But judging by past experiences, the MTO project may even face delays, and may not come on-stream over the forecast period till 2013.Nigeria’s current petrochemicals capacity, stands at 300,000tpa of ethylene, 125,000tpa of propylene, 250,000tpa of polyethylene (PE) and 80,000tpa of polypropylene (PP). Clearly, growth in the petrochemicals sector and particularly in the chemicals and manufacturing segments of the business is something the country really needs for its industrial development. Nigeria, currently boasts of just three petrochemical plants, two of which are subsidiaries of Nigerian National Petroleum Corporation, NNPC, with different success stories. The Indorama-Eleme Petrochemical Company Ltd, EPCL, located in Port Harcourt, was built in 1995. It was designed to produce 240,000 metric tonnes per year of PE, and 95,000 metric tonnes per year of PP, and has grown to become one of the leading suppliers of polyolefins, an important source of industrial chemicals and plastic products on the continent. Originally wholly-owned by NNPC, it now has a core investor who owns 75 percent equity in the company. It currently accounts for more than 10 percent of Nigeria’s non-oil export. The managing director of the company, Manish Mundra, disclosed that EPCL has not only surpassed 100 per cent installation capacity it is also exporting polymer resins, used in manufacture of plastics, to Europe, Asia and Africa.
Warri refining and Petrochemical Company Ltd, WRPC, and Kaduna Refining and Petrochemical Company Ltd, KRPC, on the other hand, have had chequered histories. The 125,000 bpd WRPC complex which produces polypropylene and carbon black, has suffered stoppages and equipment failure in the past and this has resulted in falling output. Also KRPC, which produces benzene, an important source of casing for computers, electrical goods and household plastic items, has had numerous shut-downs.�
The Eleme Petrochemical plant was shut down for two whole years due to failure to achieve successful Turn Around Maintenance, TAM. Not until 2006 when the company changed hands in what was seen as Nigeria’s most successful privatization, that saw a group of investors led by an Indonesian group, Indorama, declared as the core investor by the National Council on Privatization, did things start to turn around for good. This move has evidently boosted the nation’s economy, helping the Rivers State government to garner over N5bn as dividend in just four years. Rivers State has a stake in the 75 per cent ownership held by Indorama. Apparently buoyed by the excellent performance of the company, Mandra has expressed confidence that Nigeria as a country can truly become an industrialized nation and exporter of industrial goods. “After operating for four years, Indorama/EPCL has shown that Nigeria can do it and has done it”. Mundra disclosed recently at a function in the company’s headquarters in Port Harcourt that “our company has made tremendous progress to put Nigeria on the petrochemicals export map”. This was confirmed by a performance merit award from the federal government of Nigeria in October 2010 through the Nigerian Export Promotions Council, NEPC. Industry sources say Indorama/EPCL has become a world-class organization whose high-quality polymer resins are exported to 20 countries of the world, by which feat Nigeria has become a net exporter of petrochemical products.
After surpassing 100 per cent installed production capacity, Indorama/EPCL has concluded plans for the establishment of a fertilizer and ethanol plant. Should this take-off, Rivers state would boast of two fertilizer plants, the other being NAFCON, which has been bought over by Notore which resumed production in 2009, after many years of dormancy in government’s hands. This should see 1mn tpa urea capacity added in 2012, 2014 and 2016, totalling 3mn tpa when completed. But the supply of natural gas liquid, NGL, has always been a problem stifling operations of the company. The company through the Managing Director, has appealed to the government to intervene in the supply of Natural Gas Liquid, NGL, to the company to save its production, NGL being the raw materials used at EPCL.
The need to exploit the country’s gas resources have led to an industrial investment programme, ‘The Gas Revolution, Rebirth of Nigeria’s Industrialisation’ was launched by President Goodluck Jonathan, in March 2011. Under the programme the Federal Government expect $10 billion of foreign investment on 10 new plants in the petrochemical and fertilizer industries. The full implementation of the entire Gas Master Plan will also result in about $25billion worth of investments in gas processing, transmission and downstream gas utilisation projects. The projects will facilitate to the establishment of one major petrochemical plant, two fertilizer plants, five fertilizer blending plants, a methanol plant and a Liquefied Petroleum Gas distribution plant.
“The combination of the planned investment will result in the significant in-flow of foreign direct investment of over $10 billion between 2012 and 2014 when all the plants will be operational,” Petroleum Minister, Diezani Allison-Madueke said.
Indian firm, Nagarjuna Fertilizers and Chemicals Limited, NFCL, was among the companies that signed an agreement with the Nigerian Government to set up petrochemical fertilizer plants in the country. NFCL will team up with US oil major Chevron Nigeria Limited to construct five fertilizer blending factories in different geopolitical zones of the country. NFCL is planning a fertilizer complex with capacities for 730,000tpa ammonia and 1.25mn tpa urea, with completion scheduled for 2014-15, although this is dependent on an agreement with NNPC for natural gas feedstock. By 2015, the level of urea capacity could reach 4.5mn tpa, although this target is vulnerable to the various political, economic, infrastructural and regulatory risks facing manufacturers in Nigeria.
Similarly, Saudi Arabian firm, Xenel, will construct a world class petrochemical plant in the Koko Free Trade Zone (FTZ), in Warri, Delta state, with a capacity of about 1.3 million tonnes per annum. Furthermore, Oando Nigeria Plc and Nigerian Agip Oil Company are to jointly build a $3 billion Central Gas Processing Facility in the country.
President Jonathan said the gas project is meant to fast-track Nigeria’s industrial rebirth, which would see domestic gas supply rising to over 10 billion cubic feet per day by 2020 from the current level of 1 billion cubic feet per day. “Based on the agenda, it is our expectation that by 2014, we would have positioned Nigeria as the regional hub for gas-based industries of fertilizers, petrochemicals and methanol,” Jonathan stated in Abuja. Jonathan hopes 500,000 new jobs would be created through the massive gas programme expected to attract new investments of US$5 billion.
This effort of the Jonathan administration should be commended. One hopes the plans would be implemented, and continued by whoever takes the presidential seat on May 29. Nigeria’s petrochemicals sector really needs private sector participation and new investments. This will improve efficiency and add value to its oil and gas utilisation. The government should make more judicious use of the country’s valuable gas and gas-based petrochemical feedstocks by increasing the number of its petrochemical plants. Given the critical role the petrochemical sector plays in the economy, all hands should be on deck to realize the present administration’s objective.