- wins hearts of major local and international oil traders
- signs 11m barrels crude processing agreement with a Vitol backed local company
- seeks to refine 1m barrels per day soon
News Desk Report
In what can be described as a very rare achievement, Ghana’s Tema Oil Refinery has suddenly become a preferred choice for major oil traders, both local and international who are now seeking for opportunities to process their crude oil at TOR at a fee.
With the confidence of traders and some finance houses restored in the refinery, TOR which hitherto was in the news for lack of crude has continuously processed circa 4 million barrels of crude oil out of a total of 11 million barrels since August 2019.
This follows the signing of a tolling crude oil processing agreement between Tema Oil Refinery and a locally based energy company backed by its international oil and gas trading partner, Vitol. The contract would ensure that TOR continues processing of crude oil up to the end of September 2020.
According to the MD of TOR, Isaac Osei, the Refinery is currently operating a tolling model where it processes crude oil for/on behalf of third parties at a fee. This arrangement places minimum or no risk at all on the refinery as the processor since the crude oil is purchased, transported and marketed by the third party.
Mr. Osei explained that the third parties who enter into tolling agreements with TOR are confident in the new operating efficiency philosophy as well as the transparency at TOR and are thus motivated to do business with TOR.
He said although the current arrangement covers processing crude oil at CDU, the RFCC which is currently under nitrogen pressure would also soon be engaged after negotiations between TOR and some potential partners are completed.
Mr. Osei who was answering questions from energy reporters on the sidelines of the ongoing African Refiners Association conference in Accra mentioned that aside from the current tolling agreement with a locally based company backed by Vitol, TOR is also negotiating to sign similar tolling agreements with other international traders like Gemcorp, BP, and Philia. The former Cocobod CEO attributed this development at TOR to guarantees on plant efficiency and effectiveness
“After a careful diagnosis of TOR’s challenges, the Board and Management met with the workers and charged them to work in an efficient manner in order to restore the company to its glorious days and I’m happy to announce that with this new operating philosophy at TOR, our trading partners have realized that TOR is technically viable and could indeed give them value for money with the right structures in place,” Mr. Osei stated
He explained that TOR’s new philosophy of ‘operating efficiency’ is centered around the company’s Utilities section (Power House) the power generation hub of the refinery. Currently, TOR uses Refinery Fuel Gas (FG) that is generated as a by-product of the refining processes at RFCC and CDU. This fuel gas generated at TOR is however inadequate to fire the various heaters in the refinery.
The short fall, Mr. Osei explained is made up with Fuel Oil in the form of AR or Cracked Fuel Oil, a high value product, a situation Mr. Osei observed used to erode the refinery of its profit margins.
To surmount this challenge, Mr. Osei revealed that the commerce and technical teams ensured that TOR came up with both long and short term strategies: In the short term, the company has negotiated that all processing agreements with third parties should cater for the challenge of using AR to power the boilers in the refinery.
In the long term, however, TOR has set up a technical team which has presented an actionable plan to link TOR to VRA (Volta River Authority) to tap gas from the WAPCO (West African Gas Pipeline Company) pipeline to fire the furnaces and boilers instead of using Fuel Oil, Mr. Osei stated.
Mr Osei lauded the Nana Akufo Addo government for the current positive developments at TOR. He mentioned the immense support the government has given to TOR through the Ministries of Finance and Energy.
“TOR has reached this stage because the government believed in the strategic role we play here at TOR and has thus assisted us in many ways, including restoring our capacity and ensuring efficiency in our power generating activities.
I’m happy to inform you that with the support of government, TOR has completed the payment for its second heater and our capacity would be restored to the nameplate capacity of 45,000 bpsd, by the end of the first quarter of 2020. This means TOR will be able to refine 1 million barrels of crude oil in just 22 days thereby making room for more companies to refine their crude oil at TOR.”