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‘How to solve fuel crisis’

With over 10 years’ experience in the oil and gas industry, what have you noticed is the major problem with Nigeria’s downstream, particularly in area…

With over 10 years’ experience in the oil and gas industry, what have you noticed is the major problem with Nigeria’s downstream, particularly in area of availability of refined fuel?
 I think the major problem we have in the downstream sector is the problem of strategy. The strategy model that is being used to distribute refined products across the country is outdated and will require some revision. That is the main issue I see in the downstream and then corruption to some extent has impacted the ability to effectively distribute fuel.
You have put forward a three-node strategy you said can permanently solve the problem of fuel scarcity in the country. Explain what it entails?
The three-node strategy is based on policy framework review and technology. On the policy side we are espousing the splitting or unbundling of the downstream sector so as to make it more efficient and effective. What we are suggesting is that we have three subsectors in the downstream, namely: downstream-upstream, the downstream-midstream and the downstream-downstream.  By Downstream-upstream we mean having a separate entity within the downstream sector that will be overseeing refining of crude oil. Another thing that is different from what we currently do is that we are recommending refining crude at source which gets handled by the downstream-upstream subsector. After the crude gets refined at source it is taken over by the downstream-midstream subsector which manages the distribution at vessel level. It gets distributed and into the tank farms. When it gets to the tank farms there is a handshake between the downstream-midstream and the downstream-downstream. The downstream-downstream now takes over and ensures that the fuel gets into the fuel tanks of the Nigerian consumer.
If this strategy is implemented how long will it take for Nigeria to exit fuel import or get over the crisis of recurring fuel shortages?
To be realistic, there is no short term solution; it doesn’t proffer short term solution but what I call a mid-to-long-term solution to the crisis. We are looking at a situation where if government is committed to support the model to its full implementation, in the next 12 months fuel crisis in Nigeria will be history.
Refineries are coming on-stream in the next three years particularly the Dangote refinery. By then the problem of fuel shortage will have been eliminated. Will this not be a threat to your model?
I see it the other way round; I see it as a threat to Dangote’s approach to the business. There is nothing different that he is doing except that private hands are going be managing his refinery. He has spotted refinery away from the source which is the key component of the model that makes it fit-for-purpose for the shortage of petroleum products. Because he will still be transporting the crude oil through pipelines that would go over long distances there is still that opportunity for sabotage and vandalism. So, it doesn’t take care of some of the key causes of fuel scarcity in Nigeria.
Does the model that you are canvassing take care of the issues of pipeline vandalism and other downstream related problems that have contrived to cause product scarcity?
The model solves the impact of pipeline vandalism to availability of refined fuel in Nigeria. How does it do that? The model recommends that crude oil is refined at source and this is based on what we know that in the last 50 years companies like Total, Mobil have consistently demonstrated operational efficiency in the exploration and production of crude oil. We are recommending that they extend that level of operational capacity to refining so that we have more than we need in the local market.
This model you have talked about has a technology component called “Petrol-Solve 1.3” as user friendly app that will help government and consumers monitor real time fuel volumes and distribution network management from the point of vessel loading to filling stations. What is the relationship between Petrol-Solve and the three-node strategy you are championing?
Petrol-Solve is more of an enabler; it enables the three-node model implementation. Petrolsolve gives you that surveillance that you would need for you to effectively manage the system. There is a saying that you cannot manage what you cannot track. Petrolsolve visualizes the critical data set needed to effectively manage the three-node strategy.
 What will it cost Nigeria to implement these technology and strategy that you are canvassing?
I did a high level cost outlay for Abuja of what it will take to implement Petrosolve for the downstream-downstream sector. Don’t forget I mentioned that Petrolsolve would have capabilities or functionalities to place surveillance on the downstream-midstream sector   and the downstream-downstream sector. So, for the downstream-downstream sector, with about $4.5m we should be able to deploy Petrosolve.
 

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