Stakeholders seek leeway, return to profitability
The Nigerian National Petroleum Corporation (NNPC), some multinationals and local partners have in the last two years attracted about $32 billion investment into the Nigerian oil and gas sector.
The investment is coming exactly two years after the Group Managing Director of NNPC, Mele Kyari, assumed office at the state oil firm.
While a $3.15bn Alternative Financing Package with Sterling Exploration and Energy Production Company Limited (SEEPCO) and other partners for the development of NPDC’s OML 13 was signed recently, a new $10billion investment in the development of the Bonga South-East Field appears feasible.
The corporation had also signed a pact hovering around $2.8billion for the construction of the Ajaokuta Kaduna Kano pipeline project while the $3.6bn Brass Methanol Plant in Odioma, Bayelsa State as well as $260m financing agreement for the Assa-North Ohaji South (ANOH) Gas Project with Seplat were also championed by the corporation.
A scoreboard document obtained by The Guardian also showed that while the group led the Nigerian Content Development and Monitoring Board (NCDMB) and Zed Energy for the construction of the N10.5bn Brass Petroleum Products Terminal, a $1.5bn Engineering, Procurement and Construction (EPC) Contract Agreement was signed with Tecnimont SpA, for the complete rehabilitation of Port Harcourt Refinery.
There was also a $10 billion investment for the NLNG train seven, which is expected to create 12,000 direct while N875.75m NPDC OML 65 Alternative Funding and Technical Services package with CMES-OMS Petroleum Development Company came on stream.
President Muhammadu Buhari had on Thursday, 20th June 2019 confirmed the appointment of Kyari, as the new Group Managing Director (GMD) of NNPC, taking over from the late Maikanti Bari as the 19th head of the state oil firm.
Kyari had noted that boosting the nation’s oil production to three million barrels per day was a priority, although output cap by the Organisation of Oil Exporting Countries (OPEC) and prevailing challenges from the COVID-19 pandemic limited progress, the corporation had noted that investment in the upstream sector would drastically drive daily production.
The resolution of the dispute involving Shell and Belema Oil is expected to unlock over 30,000barrels per day production in OML 25 while the Abo OML 125 Heads of Terms resolution reported resolved issues affecting most deep offshore Production Sharing Contracts.x
With expected revenue of $20billion to the government from train seven, the document noted that a Gas Development Agreement (GDA) on the Oil Mining Lease (OML) 143 between the corporation and its partner, the nation’s gas production would receive additional 1.2trillion cubic feet (tcf).
Kyari equally noted that Oredo Integrated Gas Handling Facility (IGHF) and the Liquefied Petroleum Gas Storage and Dispensing Unit, wholly-owned and constructed by the Nigerian Petroleum Development Company (NPDC) would address domestic gas supply challenges, delivering over 200 million standard cubic feet of dry gas per day and 330 metric tonnes of Liquefied Petroleum Gas (cooking gas).
The corporation had noted that pipeline networks are currently being revamped to strengthen for seamless products distribution system through a Build, Operate and Transfer (BOT) model whose process is already at an advanced stage.
While the operational model for the refineries post-rehabilitation is expected to take place with the call for bids for the Operations and Maintenance Contract for the refineries, Kyari had stated that the EPC contracting for Kaduna and Warri refineries has progressed to an advanced stage with a certificate of no objection secured from BPP on the award of the contract.
An energy economist and legal practitioner, Ameh Madaki noted that continuous and deliberate attempts being made towards ensuring transparency in the sector, especially through the publication of the firm’s audit must be commended but at the same time sustained.
“It is something good that the GMD has prioritised transparency. That is the first time we are seeing such from the corporation so it should be supported and sustainable,” Madaki said.
He however insisted that it remained unacceptable for the corporation to remain a loss-making entity, adding that there was a need for the corporation to ensure profitability under the current administration.
Madaki also noted that the seamless supply of petroleum products though deserves commendation, must not continue to add burden on the finances of the state-oil-firm, lamenting that the development accounted for the reasons the company continue to record losses.
With the Petroleum Industry Bill almost becoming a reality, industry stakeholder, Michael Faniran noted that the current GMD has critical roles to play in ensuring that the corporation is fully prepared to transition into a formidable commercial entity.
According to him, the effort made in the areas of transparency, especially with the publication of two recent audited reports, has significant implications for the oil firm, particularly eroding the negative image of the corporation.
Executive Director, Centre for Transparency Advocacy (CTA), Faith Nwadishi, commitment is needed from the corporation towards the implementation of some of the provisions of the Extractive Industry Transparency Initiative, especially in the areas of contract transparency, adding that the corporation must become more accessible.
She also added that the current NNPC must play a key role in ensuring that the organisation becomes viable in the light of the passed PIB, noting that expectations were high for the GMD to use his experience in shifting the company from a public enterprise to private sector organisation.
Nwadishi said: “I think the appointment of Kyari is one of the best things that has happened to NNPC. I have worked with him while being on the board of EITI and I must commend his commitment to transparency especially opening up the books of NNPC. But there are rooms for improvement in the areas of accessibility, especially on the implementation of contract transparency.”