‘Nigeria’s downstream digitization elusive despite huge benefits’

Stakeholders have expressed concerned over the low introduction of digital technologies in Nigeria’s downstream petroleum industry value chain operations.

They insisted that despite the huge benefits and positive changes the initiative had brought to the sector across the world, the country lagged far behind.

Indeed, downstream operations, including refining of petroleum crude oil, and the processing and purifying of raw natural gas, as well as the marketing and distribution of products derived from oil and gas mirror the health of the industry and economy at large, as these have direct impact on the people.

While sophisticated technologies are increasingly revolutionising every aspect of petroleum downstream operations – from routing processes at refining plants to distribution of products, industry players argued that Nigeria still has a long way to go in this regard.

Indeed, operations such as retailing of products are becoming self-service, while distribution and transportation of commodities are becoming seamless, efficient, open and accurate through the deployment of new technologies in many of the world’s economies; lack of political will among policymakers has continued to frustrate catch-up efforts in Nigeria.

Considering that issues relating to corruption, transparency and accountability remain major challenges surrounding the governance of natural resources in Nigeria, industry players insist that full digitalisation would offer higher value for money in the industry.

This is particularly so in areas like production, to enhance productivity, ensure efficient use of materials, better product quality, improved safety, shorter workweeks for labour, and reduced factory lead times as well as stem corruption, while increasing revenue for private and public operators.

The Nigerian National Petroleum Corporation (NNPC), recently revealed that daily consumption of Premium Motor Spirit (PMS), otherwise called petrol, remained unknown, but experts argued that the high level of fraud committed across retail outlets, and challenges associated with haulage of products in-country, can be addressed if digital technology is deployed.

With new refineries coming on stream and old ones billed for overhaul, experts stress the need for government and private players to ensure that digital technologies are deployed for improved process safety, and asset performance.

These, will in turn, reduce unplanned shutdowns; and establish predictive maintenance with condition-based implementation by merging technology and maintenance data.

Latest report by the World Refinery Association (WRA), made available to The Guardian, indicate that since refineries, petrochemical plants, and other downstream facilities are complex installations, linking processing units with sophisticated digital technologies demand a clear plan that would prioritise clear business objectives.

Such objectives will also include knowledge of best practice in the field of digitalisation equipment software, special attention to ergonomics (in mobile device applications), careful planning about the architecture/application, including complete, accurate, structured database of equipment and technology objects and emphasis on ease of handling and access.

The report also stressed the need for organisations to achieve knowledge management for business processes so that implemented databases could be easily maintained. This will allow a long-lasting framework to be “built-in” with properly designed, user-friendly access, chemical process optimisation via loop-turning and yield optimisation, monitoring of equipment and unit conditions for predictive maintenance, training applications for operators and engineers, as worker safety is key for industrial automation.

According to the WRA report, digitalisation of processes translates into a more automated operating environment, and workforce adjustment.

Speaking on the development, the General Manager, Corporate Services, Petroleum Equalisation Fund (Management) Board (PEF), Dr. Goddy Nnadi, said there is a conscious attempt by the government to automate downstream operations, especially the services handled by the agency.

PEF(M)B is responsible for reimbursing petroleum marketing companies for any losses suffered by them, solely and exclusive, as a result of sale of petroleum products at uniform prices throughout the nation.

He said PEF(M)B had introduced its AQUILA programme to do away with paper work and human interferences across depots, and would in the coming weeks; launch the second phase of the initiative.

If the plan becomes a reality, Nnadi expects a fully digitised platform that would provide accurate data by monitoring activities from oil vessels to tank farms, depots and fuel stations across the country

Under the plan, payment system including receipts would be automatically generated, human interferences as well corruption would be cut off, accurate data on the availability and level of products at tank farms and petrol stations across Nigeria would be feasible, he said.

On his part, Chairman/CEO, International Energy Services (IES) Ltd., Dr Diran Fawibe, while urging marketers to digitalise operations of fuel stations across Nigeria, to make them self-service outlets, noted that this may be jettisoned because it would be capital intensive.

He said: “It is a whole lot of technology development. I am not sure the country has such resources, but I am sure it can be done depending on the amount of financial resources that could be deployed.

“Our problem in Nigeria is unique and that is why issues like this become topical. In other countries, people will want to digitalise to achieve desired objectives, but for DPR to pool the network that would embrace all the retail outlets and the refineries would be a tall order.”

He said one area government could quickly look at is to charge NNPC to automate operations in the refineries and depots, to ascertain when refineries are working, and predict happens across distribution channels.
But Spokesman for the NNPC, Ndu Ughamadu, who was contacted on the subject, did not respond to The Guardian enquiry.

The Managing Director, Mudiame International Ltd., Sunny Eromosele, noted that full automation of downstream processes is possible, but may remain elusive for now due to the absence of the required technology.

“I see digitalisation of the downstream happening in the future. But currently we do not have the technology. Most fuel stations are even still cash based. Digitalisation is needed for accuracy, improved delivery and safety.

“In Europe and America, fuel stations are now automatically self service. We need to drive the oil and gas sector with technology,” he said.

While Eromosele, called for investment in indigenous technology to propel such initiative, he, however, warned that emerging technologies could make more people lose their job in Africa.

Associate Lecturer, Centre for Petroleum, Energy Economics and Law (CPEEL), University of Ibadan, Dr. Olufemi Olarewaju, noted that since digitalisation reduces human interaction within processes, reduces waste, increases efficiency and reduces corruption, there was a need to encourage full upgrade of downstream activities into automated platforms.

Citing a recent innovation by the Department of Petroleum Resources (DPR), which allows permits to be generated electronically, he said digitalisation remained one of the basic ways to overhaul downstream operations, and address the challenges of corruption and inefficiency.

Abuja-based spokesperson for DPR, the industry regulator, Seidu Muhammad, did not also respond to The Guardian enquiry.

But Olarewaju argued: “If the level of digitalisation going on across the world can be applied in our context, there will be efficiency improvement, waste reduction; corruption reduction will be the immediate outcomes, government money will be secured because payment would be done online.

It is important for us to drive this type of innovations.

“The technologies are available; all we need is political willingness from the government.

When you automate, so many things will happen; human component will be removed, you will be able to block corruption, there will be transparency, and that makes accountability easier,” said Olarewaju.

Although Reuben Apollo, Spokesperson for the Petroleum Products Pricing Regulatory Agency (PPPRA), responsible for monitoring and regulating prices and supply and distribution of products, told The Guardian that the agency has plans for digitalisation, but did not give further details.

However, the WRA Report noted that the expanding roles of wireless systems in downstream facilities can enable companies to collect data unprecedented in richness and timeliness because the sensors increasingly rely on wireless communication networks rather than “hard-wiring”.