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HOW OTAKIKPO ONSHORE CRUDE OIL TERMINAL WILL PROFFER SOLUTIONS TO CHALLENGES IN NIGERIA’S OIL AND GAS INDUSTRY – ADEGBULUGBE
…As Chairman Green Energy Int’l Ltd speaks on the place of first indigenous facility after 50 years of relying on multinationals
Prof Anthony Adegbulugbe, Chairman of Green Energy International Limited (GEIL) speaks about the main challenges the domestic upstream sector is experiencing, the company’s approach to overcoming them and its strategy for increasing its oil output. GEIL is an indigenous oil and gas company in Nigeria.
Question: What are the main challenges that the domestic upstream sector is experiencing, and what is GEIL’s approach to overcoming them?
Answer: An important barrier in furthering the development of the upstream sector in Nigeria is the high production cost per barrel of oil, which is around USD 40, one of the highest rates in the world. Both the government and special committees are looking into this to find ways to cut out waste and, for example, shorten the contract cycles.
As far as small upstream companies such as us are concerned, we really have to think outside the box to survive because if your production costs are around USD 40 while the price of oil fluctuates between USD 60 and USD 80, then you are in trouble. To navigate it, you really have to be efficient, for instance, by training your people to deliver works that you normally contract out.
We already have experience in training and taking care of the engineering in-house. If you want to do any project nowadays, EPC companies will want to do a FEED, slapping you with USD 4-5 million in invoices before you even realise what is happening, and we cannot afford that. Our engineers are also very business oriented, with most of them having an MBA.
The bottom line here is that if an independent E&P player wants to remain competitive in an already challenging environment, it has to develop strong internal capacity, wisely managing and optimising both the human and capital resources.
Question: What is your company’s strategy for stepping up its oil output, and what are its targets?
Answer: Our aim is to step up production in the next few months. From our Otakikpo field in OML 11, we are currently producing approximately 7,000-7,500 bopd, and we’re looking to increase that number to 15,000 bopd before the end of 2025. Our approach has always been very lean and prudent, which has allowed us to save a lot of money and get ahead of the curve as a local E&P player.
The strategy we have adopted is based on experience. Once we jump into any project, the first task is to break it into components to give us flexibility from the beginning to know where we can push more and where it is better to wait.
Then, we do not want to embark on excessively large projects. That is a recipe for not getting anything done. We are an ambitious company, but we strongly believe in a step-by-step approach, learning everything that we can about the process before aiming higher.
This might take us longer, but it is more efficient and mitigates risks, which is something that banks, off takers and contractors see in us. When we raise money, we do it gradually, building our financing capabilities while squeezing our internal resources to give us a solid foundation to always have the funding to grow organically.
I will give you an example: two years ago, we wanted to drill, and we got a small loan from a bank. As soon as we became successful in that drilling campaign, we were supposed to pay back the loan in three years. We paid it back in less than 18 months, showing our banker that we are the kind of company that will tighten its belt rather than junketing.
Credit institutions trust us, and they are eager to provide us with financing because they know that we pay and do so quickly. Finally, another big advantage that we have is that we have many financial modelling experts, which has helped us shorten the time it takes to process our loan applications.
Question: Can you provide us with some updates about the oil export terminal project that GEIL is carrying out?
Answer:? Together with our strategic partner Atlantic Terminal Infrastructure, who is responsible for its construction, we are establishing the first indigenous onshore oil export terminal. With all the equipment and building targets already met, we expect to have it operational by Q1 2025. Currently the capacity of our terminal is 750,000 barrels and can expand to 3 million barrels just by adding more tanks.
This undertaking represents another great example of our modus operandi. We develop and implement our projects on a scalable modular philosophy. For instance, the terminal we have built has an ultimate capacity of 3 million barrels. We first started with a 750,000-barrel-capacity terminal, and then we assessed its success before expanding.
Let me elaborate on this a little. First, if you start with a 3-million-barrel-capacity terminal, it will take you longer to build. Second, your facility is likely to be underutilised. However, if you build, let’s say, a 600,000-barrel-capacity terminal and you are producing between 10,000 and 15,000 bopd, your capacity factor will be high, meaning that your asset is efficient, and you can increase its capacity.
Furthermore, building a 3-million-barrel terminal will take seven years, and what use is it for us? It does not make sense both from economic and financial points of view. This is what I call a soft strategy: deliver something that you can use immediately and that can affect your bottom line from the point it becomes operational. This will make it easier to expand at a later stage.
Question: What are the key advantages the terminal will bring to the sector once it becomes operational?
Answer: This project is of national importance, being highly strategic for the country as a whole, as the terminal can function as a hub for all the players operating in the area. We will benefit from the terminal by obtaining lower export tariffs, but as we have pitched to the government, this should not be seen as GEIL’s terminal but rather as a Nigerian asset.
There are discussions ongoing at the executive level on how to connect all the fields near the terminal and how to provide players incentives and opportunities to develop them. For example, the Obodo field in OML 11 has not produced in more than 20 years, and it is less than 10 kilometres away from the terminal. The field alone can deliver close to 50,000 bopd if the field is connected to our terminal by a three-phase pipeline. We believe this is one of the ways to help the country step up its oil production.
Question: What are the other major undertakings GEIL is involved in at the moment?
Answer: In December 2017, we received approval to establish an LPG extraction plant in the Niger Delta, which started in January 2024 and is undergoing a test run at the moment. The plant is Nigeria’s first modular LPG extraction asset. It was commissioned by the honourable minister of petroleum (Gas) in Q1 2025. We bought the plant from China, but 90% of the installation was done by Nigerians. The plant is currently running at 70% of its nameplate capacity as of Q2 2025.
Then, we are planning to expand by drilling more wells, which means there will be more associated gas, but we feel comfortable given the experience we have now with the extraction plant. That is why we want to expand and start building an additional modular extraction plant before the end of 2025. This would allow us to bring in a further 12 mcf [340,000 cubic metres] of gas to reach around 25 mcf [707,500 cubic metres] in total.
As you know, it is very expensive to flare now due to the high penalties, and it does not make sense. It is like burning cash. So, we are thinking internally about how to fully utilise and capitalise on that associated gas.
Question: What uses for the associated gas are you currently considering?
Answer: One of the potential solutions is to use part to power our field, channelling it into our 20-MW-capacity power generation facility at Otakikpo. With the associated gas, we can also produce power which can then be connected to the national grid.
Generating power and connecting it to the national grid has some bottlenecks. For example, how are we going to get paid? The accounts receivable for most of the GenCos in the country can build more power plants. Another solution is to use our associated gas and available power for an industrial park suitably located next to our field, thereby improving the economy and the business ecosystem of the area.
For example, one of the major occupations there is artisan fishing, where a large number of fish are wasted because there is no refrigeration. This is due to a lack of power. Once we have electricity in the proposed industrial park, the area can then be developed into a hub for fish processing and export.
We have actually made steps with the government to declare that area as an export free trade zone. We are processing an application. Then we have to wait for a decision and for the additional extraction plant to be stable. We’re looking at Q2 2025 to start vigorously operating there.
The establishment of an export free trade zone entails huge opportunities to bolster local industries and manufacturing activities. It is just a matter of mobilising state government industrialists by attracting them with the potential advantages of what such an area would entail.
Question: Where do you see the company in the next four to five years?
Answer: Our vision is to position ourselves as a major E&P player in the country. At the moment, we are a small company, but in the next five years, we want to be one of the biggest small, independent operators, contributing significantly to the national output. When I say this, I am talking about 100,000 bopd, either from our fields or in collaboration with operators managing assets around us. Our joint potential will be fully unlocked thanks to our oil export terminal.
One of GEIL’s greatest strengths has always been its integrated approach to the energy sector. We do not limit ourselves to producing oil but rather focus on the bigger picture, encompassing LPG, power and industrial parks. We have started becoming a full-fledged energy company, and we will continue this process as time goes on.
We are looking ahead with optimism, encouraged by Minister Lokpobiri’s words commending us as a “shining example of what Nigerians can accomplish.”
I’d like to conclude by adding a few words about the global energy transition. It might take more time than expected, but it is happening, and Nigeria – as an important oil-exporting country – needs to maximise its oil revenues now and invest money in its funds wisely for renewables, capacity building, infrastructure and technology transfer in the energy sector. This will guarantee a secure energy future for the nation.
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