Market Review

The international market for low sulphur refined petroleum products turns over some 10 million barrels per day, with annual growth rate of about 7%. While we intend to primarily supply the markets of Europe and America, provisions have been made for the preference of our investors to supply regions of their choice.

A number of countries have legislated for lower emissions standards as a direct result of agitations by environmentalists for a cleaner planet. The strong demand for low sulphur products therefore looks set to continue, bringing with it further opportunities.

This project enjoys limited competition, as most refineries in America and Europe are winding down principally due to environmental pollution factors. Secondly, we enjoy an enviable comparative advantage in terms of operating cost, incentives, cheap labour technological advantage and uninterrupted supply of feedstock. Although an export oriented refinery, one cannot rule out the possibility of local sales.

The four Nigerian government-owned refineries, with a combined capacity of under 500,000 bpsd, have been grossly mismanaged. They have also faced problems arising from sabotage, fire, poor management and lack of turnaround maintenance. These have sharply decreased outputs, thus giving rise to importation of finished products to augment local supply. In addition, the Nigerian govt plans to reduce the export of 50% of her daily crude production to support the construction of local refineries. This, they believe, will help in their drive to generate employment and increase income, pursue the goals of skilled manpower and infrastructure development. Other refineries in the West African sub-region can barely meet domestic demand. There is therefore a gap which Qua Refinery can help to fill.

International demand far outweighs production, even in the next 25 years, according to world statistic, hence the need for more refineries in the world.

Nigeria enjoys a stable, democratic government. The oil and gas sector in Akwa Ibom State has been totally free and devoid of ethnic violence and disturbances. ExxonMobil hatch free operation is a testament to this fact. However, we plan to embark on community friendly approach by investing in social amenities and infrastructural developments in our areas of operation.

Crude oil is always available in the international (Rotterdam) market on a long term contract. Technically, we shall enter into a service/maintenance agreement with our EPCM contractors for a five year period.

The greatest strength lies in the comparative advantage of supply of feedstock at favourable prices, cheap labour cost, tax holidays and Nigerian government incentives, amongst others. The technological advantage stems from employing the most current refining methods and the utilisation of high quality, sweet crude. The refinery location is also highly conducive to this kind of investment since it is closer to both the source of supply of crude and the export terminal on the Atlantic coast.

Continuing growth in China and India further add to the opportunities open to Qua Petroleum Refinery to supply higher grade petrochemical products and polymers.

Environmental compliance initiatives have also forced most refineries in Europe and America to shut down operations, thus giving rise to increased demand for low sulphur based products.