As discovery succeeds discovery, the Gulf of Guinea is shooting up the ranks of global oil and gas producing regions—and servicing its demands is Luba Freeport, the new Jebel Ali.
It was in 1999 that the government of Equatorial Guinea realised that the port of Malabo would never be able to cope with the demands of an oil industry. But the island of Bioko is perfectly placed, not 50 miles from the coast of Cameroon and nestling between the Bight of Biafra and the Gulf of Guinea.
Malabo is the capital of Equatorial Guinea and it has a decent and well established harbour; but the port is surrounded by urban development and there’s no room to site any development around it. Accordingly, the government decided that the only solution was to develop a different site on Bioko that was free from these constraints. Together with the investment and development group Lonrho, it decided it would develop Luba to the south-west of the island as a purpose-built logistics centre for the region, attracting the oil producers away from the competing mainland ports in West Africa by tax concessions.
Thus Luba Freeport was established, and Howard McDowall, a port management consultant with 30 years of international experience in port management and oilfield logistics, was appointed as its director and general manager. McDowall has overseen the project from its development and now, more than a decade later, is seeing it gain real traction as the industry grows and Luba is getting recognised as its only really fit-for-purpose logistics hub.
Its first advantage is God-given, he says. “All the ports of West Africa have draught problems in one form or another. Big vessels can only get into the nearest alternative Douala once a day because they have to wait for the tide to get them over the sandbar. Takoradi in Ghana has a quayside that will give you 12 or 13 metres at high tide but that drops to about seven at low tide.” In Malabo, where draught is restricted to 10 metres, vessels queue for up to 10 days to get into the port, he says, and four or five days’ delay can be expected anywhere on the coast from Ghana to Cameroon.
The other disadvantage they all share with Malabo is that these ports are landlocked, having developed as the port area of a city. They have no hinterland and very restricted space around the quayside for exploration drilling companies to establish storage and supply facilities. “We established Luba Freeport as a logistics base dedicated to the oil industry. We are in a well sheltered bay, with deep water access. Luba has a natural draught of 10 metres at the current quayside, and in the next stage of our development that will increase to at least 16 metres.” The tide differential is the lowest in West Africa, he adds, at just one metre.
At the time of Luba Freeport’s inception, ExxonMobil was just about the main oil producer. Now that it has been joined by Marathon and Amerada Hess, at around 400,000 barrels a day, Equatorial Guinea has become the third largest producing nation in West Africa after Nigeria and Angola, just 15 years after its first crude was pumped. All of these companies have established facilities at Luba, says McDowall.
And now they have been joined by Noble Energy, which is sitting on a major oil and gas discovery in the region. He paints a picture of the activity Noble Energy’s involvement will trigger before it starts to pump oil in 2012: “They have completed all their major exploration wells and the development phase, and are ready for entering the production phase later this year or early in 2012. Single Buoy Moorings (SBM), with its operating offices in Monaco, is starting to bring in various equipment they require like suction piles, chains, anchors etc, ready for the arrival of the floating production storage and offloading unit [FPSO] which is due later this year. Following SBM’s work, the French company Technip will bring in the umbilicals ready for transferring the crude to the FPSO.”
At the same time the port continues to serve the existing producers. Currently Luba Freeport sees around 100 ship movements a month, but it should be noted that these are ships entering and leaving the port with the day-to-day production and maintenance chemicals and materials needed to keep the existing rigs in production. Once they are moored, the experience is very different from what happens in other West African ports.
There is no shuffling from berth to berth, because Luba Freeport was designed as a one-stop-shop. “We had a clean slate. Having been involved in oil logistics for so many years I knew where the pitfalls were going to be.” It is common at the older ports to find flexible hoses snaking across the quayside, vulnerable to traffic, machinery and human error. Splitting and leaks are common, he says. “To pump efficiently across a quay you need to be no more than 30 metres away from it. Companies like M-ISwaco and Schlumberger that supply drilling fluids and chemicals are set up at a section of quay specifically for chemicals suppliers—all their feed lines go through a trench across the quay, completely protected and covered—and they come out onto a manifold.” It makes life much easier and safer.
A supply ship can turn round really quickly, load its chemicals, engineering materials, fresh water for drilling, fuel and victuals simultaneously. Time is money in the oil business, with vessels chartering extremely expensive. Bioko is hours away from any part of the West African oilfields, so sailing times are never an issue; however the biggest attraction for clients is undoubtedly its tax-free status.
A number of other ports claim to be ‘free’ but Luba Freeport is modelled on Dubai’s Jebel Ali, McDowall explains. “We were given some very lucrative tax concessions. Clients establishing a base at Luba get a full range of tax concessions: they are exonerated from corporate income tax, tax on dividends, VAT, withholding tax and so on. One further advantage we have at Luba Freeport is that transit tax, which applies across the whole coast of West Africa and can range from one to three per cent of the CIF (cost, insurance and freight) value of the cargo is exonerated at Luba.”
Last year a 150 metre quay extension was completed by the Danish contractor Pihl. A tender is due to go out for a further 220 metre deep water phase that will be completed in 2012. With interest from China National Offshore Oil Corporation (CNOOC) and companies like Roc Oil, Repsol and the Australian Ophir Energy all active in the area, the additional capacity will undoubtedly be needed.
