To fully understand what it means to work in Africa, let’s start by saying what makes this continent commercially different from others. Africa is a vast, diverse and multifaceted continent. Each country has a different political system, different rules and customs, and differing ways of working. Even analyzing a single African zone, in this case the Sub-Saharan zone, one discovers many different Africas, even though they border on one another: there is the hydrocarbon-rich south-western part, and the eastern one, which lacks hydrocarbons and instead has focused on the development of renewables. In a nutshell, unlike Europe and America, Africa does not have a system.
Working in such a complex context first of all requires a deep knowledge of the specific particularities of each country, starting from the Local Content Law, a strong ability to adapt and a strong entrepreneurial spirit that is able to take advantage of the different business opportunities that each territory offers while also appreciating the relative risks. Accompanying us on this complex journey through the culture and business practices developed by Maire Tecnimont in Sub-Saharan Africa is Davide Pelizzola, Vice President for the Sub-Saharan Africa Region. His experience in these territories goes back a long way: while he has been working at these latitudes for Maire Tecnimont since 2014, his first knowledge of the Continent dates back to 1990, when he became part of various project teams in Nigeria for Snamprogetti. Then he traveled the world: Pakistan, the Middle East, Norway, America and Brazil. The plane landed in Africa again in 2007 with Saipem: once more in Nigeria, then Angola and Mozambique. And in 2013 he returned to Nigeria with Maire Tecnimont, where he assures us that it is a good place to live and work.
Downstream and gas monetization
Thanks to his in-depth knowledge of the dynamics in Africa, Pelizzola explains the importance of the role played by Maire Tecnimont in the promotion and development of business in Nigeria, a nation of 200 million inhabitants: «Here, we are primarily engaged in transferring know-how on downstream operations, thereby leading the country to become an in-country transformer of what it possesses in abundance, namely, underground resources». The goal of Maire Tecnimont’s activity is to build on Nigeria’s well-established upstream tradition to train entrepreneurs who can work across the entire industrial value chain. «Nigeria represents
a paradox – Pelizzola underlines –. Although it is the leading producer of oil and gas in Sub-Saharan Africa, and the fourth or fifth in the world, it has abandoned three refineries built 40 years ago, plants that guaranteed a nominal refining capacity of 450,000 barrels per day. Today, as a result of this short-sighted decision, Nigeria finds itself as an importer of refined products: in fact, it exports crude oil and then re-imports it again after it has been refined».
A contradiction that has become even more evident during the recent oil crisis, when Nigeria suffered greater losses than other oil and gas producing countries, such as Russia or the United Arab Emirates. The reason? Over the past years, these countries have developed a very extensive downstream which has allowed them – in the presence of low-priced resources – to maximize their downstream margin through gas monetization.
HOW CAN NEW BUSINESS BE DEVELOPED BY TAKING ADVANTAGE OF THE UNIQUE ASPECTS OF AREAS AND NATIONS WITH VERY DIFFERENT CHARACTERISTICS? DAVIDE PELIZZOLA, VICE PRESIDENT FOR THE SUB SAHARAN AFRICA REGION, EXPLAINS.
Nigeria, on the other hand, has built a single-income economy based on the production and export of crude oil: a particularly sensitive model that exposes it to market fluctuations. «It is precisely in this furrow, in this gap of skills and structures – explains Pelizzola – that Maire Tecnimont’s engineering excellence fits in. By bringing expertise and presenting case studies, we make local representatives aware of the value represented by the development of downstream, the so-called gas monetization, which can be implemented only with on-site processing plants. In order to stimulate the growth of the national production system and the strengthening of its service industries, Maire Tecnimont’s entrepreneurial vision – our culture of the project and its potential – becomes fundamental in Nigeria».
This is the basis for the latest award obtained by our Group. Bringing the Port Harcourt refinery back into operation (a contract worth approximately 1,500 million dollars). The project consists of the total and complete rehabilitation of the two refineries in order to restore 90% of the nominal capacity (approximately 210 thousand barrels per day).
«This contract - points out Pelizzola - makes it clear how different it is to work in Africa compared to more structured realities. The project did not exist, it was not the result of a proposal by the parties involved or by central institutions: it is Maire Tecnimont that built the foundations, supporting and assisting the client in all the various phases, including research and contact with financial backers. With this project we have conveyed the awareness of how complex and intelligent forms of investment can be made, without using public money, simply by restoring industrial structures already present in the country. The project has become a case study for the ARA (African Refinery Association), which would like to replicate it, should the conditions be right. And while our colleagues are starting to mobilize for the Port Harcourt project, we are already working on other commercial initiatives related to refineries, petrochemicals and fertilizers, on which we expect to have updates soon».
For Maire Tecnimont, Sub Saharan Africa is not just Nigeria. Thanks to the entrepreneurship and stubbornness of KT colleagues, the Group is also present on the Ivory Coast, where it has been selected as licensor/technology provider, training & technical assistance for the desulfurization of three units of the SIR refinery: the aim is to produce fuels in accordance with international specifications. In Cameroon we will upgrade the SONARA refinery, while in Angola we will install new processing units for the SONAREF refinery.
Green ammonia and the development of renewables
While in South Africa we are working with Siemens Energy, NextChem and Met Development to create green projects (hydrogen and ammonia), the value of Maire Tecnimont’s culture and entrepreneurial experience is also measured in terms of flexibility. In other words, the ability to know how to work and create business in the renewable energy sector: in both countries with a high availability of hydrocarbons, such as Nigeria, Angola, Cameroon and the Ivory Coast, and in countries without them, such as, for example, geothermal-rich Kenya, where more than 25% of the population lives without electricity and only 50% has a regular supply. This unavailability depends on the morphology of the country, which is vast and difficult to cross, where the installation of power cables and the distribution of energy in the villages - only possible with lines that cover infinite distances - proves to be a complex undertaking, increasing the final costs for families. In order to facilitate accessibility to electricity, Maire Tecnimont has implemented solutions that optimize investments and make them more competitive, using the development of renewable energy.
«The surplus production of power, which until now has been costly and a burden on the state, can be used for the development of renewables - says Pelizzola -. This way, the production of electricity for civil consumption is joined to the production of industrial development which will absorb the extra cost, making prices more competitive and affordable for families».
From a cost to a new business opportunity for the country. We are now talking about Maire Tecnimont’s project to build a plant aimed at producing low-carbon nitrates, the first in the world on an industrial scale powered by renewable energy. The facility – a further step to industrialize the production of sustainable fertilizers with the launch of Green Ammonia technology – will be built at the Oserian Two Lakes Industrial Park on the southern shores of Lake Naivasha, one hundred kilometers north of Nairobi. The initiative will allow the country to develop the market for green ammonia production. By using the excess watts and creating a supply chain linked to fertilizer production, the government saves on import costs, turning a cost for providing energy into a source of income.
Kenya has therefore come under special watch by international insiders, as ammonia is not only important in the green fertilizer sector, but also as a new environmentally friendly fuel for shipping. Easy to store (unlike Liquid Gas), it is immediately ready for use and therefore much cheaper than even hydrogen. But that’s a story we will tell you another time.
Unafraid to grow