By Manny Ita
Segun Adebutu is a name synonymous with the oil and gas business in Nigeria. He is founder and CEO of Petrolex Oil and Gas, a leading indigenous oil and gas firm which has taken by storm the sector across the value chain in Nigeria, committing over $6 billion into it. Segun is also billionaire son of the billionaire Chairman of Premier Lotto, Adebutu Kesington, aka Baba Ijebu.(‘ b’ raised to power 2, – your jaws can’t help dropping I bet).
Segun Adebutu who delved into the an oil and fuel business in 2004, recently built a storage-tank farm and other mid-stream infrastructure for $330 million, This million-dollars tank farm located in Ibefun, Ogun State is the first of its kind in sub-Saharan Africa’s energy landscape. It has storage capacity of 600 million litres of petroleum products every month and a 4,000 truck parking space as well as accommodation for truck drivers. It is expected to transform petroleum products storage and distribution in Nigeria by catering for about 60 per cent of in-country needs. No mean feat!
The tanks are connected to a pipeline at Mosimi, which will transport products around the country, according to Segun, who sees a big market in Nigeria’s 180 million-strong population, with Petrolex financing the refinery project with loans from Nigerian banks and international lenders, as well as its own revenue, he said.
The company which also plans a fertilizer plant and lubricants facility as well as a liquefied petroleum gas plant has a current workforce of about 3,000 and Adebutu expects to employ about 10,000 people directly by 2021 when all the energy projects will be “up and running.”
Petrolex is targeting listing on the Nigerian Stock Exchange in the next 10 years to ensure the business “outlives its owners” and can fund future expansion, according to Adebutu. “By the next five years we would have achieved a significant amount of our ambition, then begin strategy talks with the stock exchange.”
Well, just making money was not the sole motivating factor for going into the business according to the smart thinking Segun who grew up in Apapa and knew what challenges there were. Something, he knew had to be done. The magnitude of disaster that could result if anything happened to Apapa, considering the fact that although the port was operating, there were still queues got him thinking about how to help the industry.
A patriotic Nigerian to the core, Segun thinks it isn’t just right for people to keep blaming the government for everything wrong, as the private sector can play a huge role in righting some of the wrongs people believe lie in the domain of the government, with private investors making huge profits and investing them elsewhere.
It just doesn’t cut any ice with the gentleman that Nigeria being the seventh largest producing country in the world couldn’t solve the inherent issues in its petroleum sector and had to rely on other countries; a thought that spurred him on the huge investment – a budgeted $3.5 billion for the refineries, and by including the auxiliary cost, coming to about $8.5billion. Over the next 10-15 years, the group would have invested in the upstream, midstream and downstream sectors, a whopping $15 billion.
“South Korea does not produce oil but they have a refining capacity of 3 million barrels per day. UN estimated that by 2030, Nigeria’s population will be 300 million. They estimated that by 2050, our population would be larger than the USA. And we don’t have a functional refinery! Most them are working at 10 per cent capacity”.
With the Federal Government‘s deadline to stop importation of refined petroleum products, Petrolex looks set to fill in the gap creditably as Segun avers;
“Right now, we have a capacity when we perform optimally, we will provide 60-80 per cent of the requirement of the same products in the country. So, if our operations run well, I would think that we would have an impact on the distribution of petroleum products in the country.
The government has a target of 2019 to stop importation and to export. We have a target to be operational by 2021 and 2022 and that point we will be refining 250,000 barrels per day. It may be 25- 35 per cent of what the nation requires in terms of refining capacity”.
“And at that point, we will have an impact, not an absolute impact but an impact not the less. On 2019, I can’t promise what I can’t deliver. What I know is that refinery will be ready, pipelines will be ready, fertilizer plants will be ready, and tanks will be ready but not the refinery”.
“Obviously, we are not the only player in the market. There are other companies that have similar ideas in terms of vertical integration, in terms of refining and in terms of distribution. So I believe that the government has more information about my other players in the market than I do”.
Of course there are several challenges to the business, one of which is the bringing of barges to feed the livestock, but this ground seems already covered as Adebutu assures;
“We presently have till date water vessels that can take 20,000 tonnes and we have 16 barges.
“When we first came in here, we realized that dredging was not sustainable as an option and if you find out about these things you will know that we have to include pipelines which we came up with in phase as our objectives”.
“What we did was that we went to a country that faces similar challenges, which is Netherlands. They have narrow channels that are shallow but they are still able and capable to move their products up and down. So, they came in, they did a survey and gave special barges to be able to operate which is what was done’.
“We spent close to $15 million building that route. What this essentially means is that from my STS point, whether it is in Marina or wherever, we can bring in the vessel into the channels and beat it into our size so we don’t need to dredge. That’s not to say some dredging hasn’t been done because space hasn’t been created”.
“We have finished the final engineering, using the micro turning technology. A 32-kilometer pipeline will go all the way and exit at a platform. What that means is that unlike an SPM, it can take two to three supermassive vessels that can take as much as 200,000 tonnes of petroleum product, be it crude or whatever. Then it can be converted there and it can cover as much as 200,000 metres a day by the pipeline into the facility. The reason we require that kind of volume is because that pipeline is not just pumping in or out product. There is a gas pipeline in it and also a pipeline that will handle the feedstock from the crude to the refinery”.
Financiers of the project include FCMB and WEMABank. These remarkable intent and strides have courted investors to the project with private equity funds, EXIM bank and their contractors and financiers on the Asian continent because Petrolux has shown proof of concept and the will to do the right thing.
On the prospect of acquiring assets or partnering with some companies in the upstream, Segun says; Marginal field round is coming and we are putting in bids to take over some assets alongside our partners. We have technical capacity and they have financial capacity. We learn as we go along. My sojourn into upstream is in a bionic stage. I have been doing S&D for downstream since 2004, so as a businessman, I must know my limitations because I cannot know everything. I will easily look for partners to partner with me and add to the value chain. We are participating in the bid rounds, hopefully we win. And if we don’t, anybody that wins, we will approach him and tell him we are ready to invest in their business by forming a partnership with them to guarantee feed stocks”.
Another challenge to this kind of project is that of sabotage by host communities but as it were, Segun’s ways are quite pleasing to the host communities his projects are domiciled, who also benefit immensely therefrom so he harbors no such fears as sabotage.
“We have over 2,000 workers from this community. We have supported them. The youths, the aged were all carried along. So, there is no reason to feel left out. No reason to feel they are not part of us. Before I decided to build anything here, I have always been part of this community”.
Besides this impeccable record in oil and gas, Segun has vast interest in the entertainment business, with a music record label, Baseline Records, to his name, which has music artistes like Skales, Saeon, and others.
The humbling part perhaps is that, unlike many in his class, Segun is very passionate about service to humanity, not one slightly capable of standing the sight of his fellow human being in distress or want.
Since he founded the NGO, Oladiran Olusegun Adebutu (OOA) Foundation in October 2016, millions of naira has been doled out to several indigent people in the state.
It was gathered that the NGO would reshape and implement sustainable development activities to include poverty reduction, zero hunger, increased access to healthcare, quality education and create an enabling environment for gender equality, potable water and sanitation.
Adebutu serves as the executive director and member of the board of Premier Lotto Nigeria Limited. He is the Chairman of Bluebridge Marine and Oladiran Agro-Allied Company, Oladiran Engineering & Trade Limited.