Nigeria sharpens Caribbean focus with deal to develop Grenada's nascent hydrocarbon reserves

The Caribbean, once home to vital oil refining and storage facilities, lost much of its luster during the refining downturn in 2012, which saw many Atlantic Basin refineries, including those on the US Atlantic Coast close and/or become terminals.

However, recent shifts in product flows caused by refinery rationalization and the imminent start-up of new refineries -- most notable of them being Nigeria's massive 650,000 b/d Dangote refinery -- appear to have piqued the interest of companies seeking a stake in the region's revitalization.

This includes Nigeria's Oceangate Oil and Gas Engineering company which joined forces with Global Petroleum Group to develop oil and gas reserves in the Caribbean island of Grenada in hopes of creating a regional energy hub, Oceangate said in an Oct. 27 statement.

The deal is valued at $1.8 billion and has potential to reach as much as $8 billion, as the companies develop Grenada's "significant" hydrocarbon reserves, according to Oceangate CEO Aisha Sulaiman.

Global Petroleum Group is an oil and gas exploration company operating primarily in the Caribbean, with significant offshore exploration interests in Grenada.

According to data from S&P Global Commodity Insights, GPG received a license from the Grenada government in 2008 to explore and produce oil and gas in blocks B, C, D2, D3, D4, D5 -- which covers about 7,500 square kilometers of offshore acreage altogether under a production sharing agreement with the government. The license is for 38 years.

While seismic work had been done and the recent discovery through the Nutmeg-2 well indicated substantial reserves, as of now Grenada does not have quantifiable proven reserves, according to data from the Energy Information Administration.

But there is hope that Oceangate's participation will increase the likelihood of commercial energy production on the island. So far, no oil and gas has been produced in Grenada.

Oceangate, an exploration and production company, holds a stake in the Bluewave Exploration and Production-operated Usoro field and a 100% stake in the Udara field -- both located in the Niger Delta. However, Usoro and Udara are not producing oil currently, with start-up dates forecast in 2041 and 2048, respectively, according to Commodity Insights.

Nigerian foray into Grenada

Grenada and other Caribbean islands are drawing Nigeria's attention, as the Dangote refinery moves to ramp up to full capacity and begins looking for markets for its refined products.

Earlier this month, the Dangote refinery explored potential ties with Grenada following Prime Minister Dickon Mitchell's state visit to the refinery in Lagos. Mitchell is also chairman of the Caribbean Community CARICOM, a grouping of 15 member states aimed at driving growth in the region.

Nigerian media reported that Aliko Dangote, president of the Dangote Group that owns the refinery, had hinted that partnerships with the Caribbean Community could be possible across the refining, cement and fertilizer markets in which the group operates, drawing comparisons between the two regions' historic import reliance for their fuel.

Potential oil deals could involve crude offtake agreements for the refinery, which has struggled to source sufficient feedstock domestically, in exchange for product sales to the region, Nigerian media reported Dangote as saying.

While some nearby countries, like Trinidad and Tobago, have established oil industries and reserves, Grenada's crude production has been limited by minimal exploration and production activities.

Trinidad seeks bids to restart mothballed refinery

Trinidad and Tobago is looking to restart its 168,000 b/d mothballed refinery, which was shut down in 2018 due to poor economics. The government narrowed the list of acceptable buyers/lessors for the Port-au-Prince refinery to three prospects -- one of which is a Nigerian company.

Among the three companies currently shortlisted is CRO Consortium, comprising DR Commodities Limited, Chemie-Tech and Ocala.

The other two finalists were Inca Energy LLC, located in the US, and Nigeria-based Oando PLC, owned by Wale Tinubu, nephew of Nigerian President Bola Ahmed Tinubu.

Trinidad and Tobago is the Caribbean’s largest oil producer and currently produces about 54,000 b/d of heavy Molo, medium-grade Calypso and lighter Galeota crudes. US-based importers of the crude grades include refineries like Chevron's 356,440 b/d Pascagoula; Citgo's 165,000 b/d Corpus Christi, Texas, refinery; and Monroe Energy’s 190,000 b/d plant in Trainer, Pennsylvania, according to US Customs data.