3 minute read
Game changer
Based at the Onne Multipurpose Terminal, P&O Maritime logistics has launched an innovative ‘pay as you go’ off shore supply service
In Nigeria, an innovative experiment is underway to try to reduce the supply chain costs in its notoriously expensive off shore oil sector. It is a sign that the Nigerian oil industry is maturing and making eff orts to reduce its historically very high supply base costs.
The experiments are spearheaded by the supply vessel operator P&O Maritime Logistics (operating out of Onne Multipurpose Terminal in Onne Port) and independent Nigerian oil companies looking for a competitive edge.
The traditional model for supplying offshore oil facilities (with cargo ranging from drinking water to hi-tech and extremely expensive drilling components) has been for an oil company to go for long-term chartering of supply vessels dedicated exclusively to supplying that oil company’s installations.
This has the benefit of allowing the oil company complete control of the “when” and “how” of its supply decisions. However, it has the obvious downside that it is costly to charter supply vessels unless one can fully utilize them. For it to make sense to charter, an oil company must require deliveries: (i) of large amounts of materials and (ii) at high frequencies.
In many cases, (depending on factors such as company size or oil field production phase) any single oil company does not have such requirements and chartering becomes sub-optimal.
DEMAND BASED PAYMENTS
The new generation solution is to only pay the supply vessel operator for the actual space and voyages needed. Similar to the container business, where customers only pay for the space occupied by containers onboard a vessel.
This approach makes perfect sense for the independent Nigerian-owned oil companies who do not have the financial clout of the oil majors. They can adopt a more realistic view of such overhead costs. These smaller companies must be nimbler and more cost disciplined to compete against the likes of Total, Shell and ExxonMobil.
P&O Maritime Logistics has dubbed this approach FlexDELIVERY™ and has recently launched it for the first time in Africa. Central to it, is providing the Nigerian oil sector with an easier and cheaper option for “last mile” delivery of its cargo. The company has initiated operations in Onne, Nigeria based on a weekly service (which will be ramped up as needed) via which oil companies can book the space they need. P&O Maritime then delivers to their respective offshore facilities. Thus, oil companies can move away from expensive and inflexible longterm chartering when connecting to their offshore facilities.
The new offering, which began service on the 4th of September 2021, is an expansion of P&O Maritime Logistics’ disruptive innovative ‘Supply on Demand’ to integrate shore base and quayside operations strategy designed to deliver a comprehensive logistics solution globally. The company estimates that FlexDELIVERY™ reduces costs by 20-30 per cent per unit of goods transported.
VALUE ADDED
A value-added benefit of FlexDELIVERY™ is its environmentally friendly credentials. It is estimated that FlexDELIVERY™ reduces distance travelled by 40-50 per cent and reduces fuel consumption by 20-30 per cent. Carbon emissions efficient!
At the launch of the service, Martin Helweg, CEO at P&O Maritime Logistics said: “Following the success of our Supply on Demand service, we saw a gap in the Nigerian market, spotting that the country’s offshore supply market was ripe for the revolutionary FlexDELIVERY™ system that brings efficiency and value to our customers.”
Robert Uljan, Head of General Cargo Operations, Onne Multipurpose Terminal, responding to this ground-breaking initiative, congratulated P&O Maritime Logistics on its innovative new service and notes:
“Onne Multipurpose Terminal is proud to have been chosen as the supply base for this ground-breaking new product for Nigeria’s oil-sector which promises to reduce our customers’ cost-base while also being a step towards a greener energy sector.”
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