BUA Diversifies Into Oil And Gas
BUA Group, a Nigerian conglomerate concentrating on manufacturing, infrastructure and agriculture, has diversified into the oil and gas business with the signing of a deal with Axens of France to refine 200,000 barrels per day of crude oil in the country.
The deal would see Axens, France’s largest hydrocarbons group, license key refinery technologies to BUA Group, one of Nigeria’s leading industrial conglomerates, in the contract that was signed between both parties in France yesterday.
Chairman of BUA Group, Mr. Abdulsamad Rabiu, who signed on behalf of the company, said the viability of the project, which would be located in Akwa Ibom State, was assured, given the economics of fuel importation in the country.
“Nigeria imports 90 per cent of its petroleum products. We spend 35 per cent of our foreign exchange on importing petroleum products,” The Africa Report, quoted him as saying.
The new refinery, with a capacity to produce 200,000 barrels per day (bpd), is expected to be operational in 2024.
The bidding process was managed by energy consultants, KBR, which would also be handling subsequent rounds for the engineering and construction phase, currently underway.
The refinery would be built using an undisclosed mix of debt and equity, with several development and commercial banks in negotiations with BUA Group.
The contract was signed in Paris between Rabiu and the CEO of Axens, Jean Sentenac, at a ceremony presided over by France’s Minister Delegate for Foreign Trade and Economic Attractiveness, Franck Riester.
Axens beat the US company, Honeywell UOP, which got through to the final round, according to sources close to the bid.
“President Macron has given special determination and support to this project,” Rabiu told The Africa Report.
Rabiu has been made Chairman of the Macron-initiated Franco-Nigerian Investors’ Club.
In his comments, Sentenac said the technologies that Axens is licencing would give the country the chance to breathe easier, with the plant having the ability to refine biofuels.
“We are the world leader in the Euro 5 fuel standard; this has already reduced car pollution in Europe by a factor of 5 or 6, and it also allows Nigeria to start using the latest generation of fuel efficient engines, the first step towards fighting global warming,” he said.
Rabiu noted that he believed that his investment in sustainability would pay off in the long run, as new fuel standards continue to evolve along with the climate crisis.
“It is in the DNA of BUA Group; look at our cement plants, the most sustainable in Nigeria, same with our sugar plants. This is the hard part, we cannot get this wrong. It is like in an aeroplane, you always look at who built the engine, it is the most important thing,” he said.
Riester said the deal would be “one of the things that will help build up the necessary intrapersonal relationships” between industrial players in the two countries, part of a wider French strategy of greater engagement in Anglophone Africa.
The new refinery project sets up a direct competition with Nigeria’s other large refinery project, piloted by the Dangote Group, which would be operational by 2021.
Rabiu said there’s space for another project, despite the growing international glut of refinery projects, the tapering of transport fuel use globally and the strong local competition.
This is partly because of the projection for fuel use in Nigeria itself as the country today consumes about 500,000 to 550,000 barrels a day of petrol and partly because of demand in the region.
“We will have the marine infrastructure for easy export,” said Rabiu, “and the external market for polypropylene (the other major product from the refinery) is very strong.”
The French company, which makes systems to convert oil and biomass to cleaner fuels, said it would provide technology for the greenfield project designed to produce Euro-V fuels and polypropylene targeted at domestic and regional markets.