Mele Kyari, NNPC GMD
…Oil will still remain relevant by 2040
…DOA due for amendment to move the industry forward
-By Felix Douglas
The Group Managing Director (GMD) of Nigerian National Petroleum Corporation (NNPC), Mele Kyari, was recently at the 37th Annual International Conference of the Nigerian Association of Petroleum Explorationists (NAPE) in Lagos.
Addressing the audience at the opening ceremony, the GMD noted that at present, there is a decline in exploration in the oil industry and in the last ten years, not much has been achieved in exploration, “there are some level of clarity that is required in the terrain of our industry which is not there. We know that there are attempt to put in place the appropriate legislation since 1999.”
Kyari said, investors think about their investments and how they can recover cost after investment, “exploration means you are banking on hope that you buy oil and produce it to make money from it, if you cannot make it, you bow out.”
Operators know the price of crude oil and what it is today, “it is not at the level where we want it to be. Everyone wishes to see crude oil at $70 per barrel but it is below it,” the GMD explained.
Kyari told operators and participants of the conference that another reason why there is lull in exploration activities is because of competition from other sources. Renewables have made it difficult for oil companies to focus on exploration activities. It has discouraged operators to delve into exploration.
He bemoaned the fact that reserves have not been increased from the level it was and it has remained 37 million with marginal addition of reserves and ultimately this will result to massive depletion. The target has always been 40 million of reserves but that cannot be achieved even though production is ongoing. Additions are not matching production.
The NNPC helmsman emphasised on the industry and future of oil including assumptions and belief that by 2040-2050 oil will become insignificant, “I don’t believe that,” because the best of estimates has shown that there could still be oil for duration of 100 million barrels per day globally by 2040. A situation might arise where there will be increase in population and needs to ensure the current level of consumption and production still remain relevant by 2040. “Therefore, with 100 million barrels per day by 2040, it means oil will still remain relevant.” The competition from renewable is obvious but it is no where replacement of fossil fuel in the near future
Kyari told operators to take advantage of the opportunity to produce more oil so that it can be used. There are new sources of discovery and growth in the industry especially from the multinationals and they have found oil in unexpected locations in volumes. This is adding to the available oil resources globally and competing with the production in Nigeria.
He said: “we need to quickly go back to exploration, and have this reserve to produce more because 2023 is our target.” He enjoined Members of NAPE most of whom are geologists and explorationists to make commercial decision for exploration.
The NNPC boss believed with the latest technology in the industry and innovation including use of data and skills, professionals should upgrade to take advantage of the situation. “As we worry about exploration not being highlighted in the country, we are also proud as a national oil company to find oil in cretaceous places,” Kyari enthused. He added: “We have made a number of efforts to find oil in the cretaceous. We have dug 33 wells and nearly dry wells in the Chad basin, there are some marginal finds but today as I confirm to you that we have made significant find.” This has opened a new frontier for the industry. NNPC deploys most recent technology with techniques and many of the finds today at onshore were discovered by the corporation.
According to Kyari, cretaceous is a big place with numerous opportunities, it will change the face of oil production in the country because it is cheaper to produce. He said, NNPC has moved from Kolmani River location to other places and the corporation is going to test other structures, but “NNPC cannot do it alone, please join us and I am inviting the industry to come on board so that we can do more exploration in frontier basins and move to ultra-Deepwater.” The ultra-Deepwater is unexplored.
The GMD gave hope to professionals in the oil industry that in 2020, there will bid round which in turn be an opportunity to test the ultra-Deepwater. No success can be achieved without collaboration between partners in the oil industry. Therefore, NNPC and its joint ventures production sharing partners, independents and NPDC must collaborate widely across the industry to “share information in today’s big data world, there is nothing to hide, by sharing data and information, ultimately, information that is available to the next partner will help in redefining opportunities and finding more oil and making more money.”
He appraised the topic of NAPE conference with the theme “Expanding Nigeria’s Petroleum Landscape: Digitalization, Innovation and Emerging New Technologies.” At present the world is a big data world with digital presence while innovation improves on daily basis. Technology makes the work of explorationists more efficient and produce cheaper oil much more quickly and at the end of the tunnel to utilize it in an effective environmentally friendly manner. He told NAPE members to leverage on latest technology in the industry to deliver.
NNPC is poised to ensure that the industry progresses and supports every process that will bring clarity to the country’s physical terrain by supporting the next phase of petroleum legislation.
He spoke on the amendment of the Deep Offshore Act (DOA), that is expected because it is a requirement of law that there should be an amendment in the DOA. The conditions required to make changes in the DOA is the best. It is needful for the industry because it gives room for clarity of the physical terrain and assist operators to plan. Operators should join the government to ensure that the overall legislation is overhauled. Amendment creates avenue for operators and the country to know basis of investment and how cost can be recovered and the margin work will enhance production.
Kyari stated thus: “Despite the passage of DOA amendment, this is a business, there is room for commercial conversation, I don’t believe the level of anxiety or worries that the passage of the DOA amendment has generated. I believe it is unnecessary because there is room for conversation and engagement so that this business can continue and we call on all our partners to believe this most importantly as an industry we must come together and rally around the government to make sure that we have fruitful legislation so that this country can become the next haven for investment.”
The GMD noted that in spite the worries about the passage of the DOA and concerns of operators, Nigeria is still the right place for investment.
He explained that finding oil in the Niger Delta is easier for the corporation than most places it has worked. He told operators that Nigeria is a resilient country that has adjust itself for investment and for oil workers in the industry, this is where their capacities can be tested while leaders of the industry, this is where the ability to navigate in difficult situations is put to test.
Kyari revealed that some employees who worked in multinational oil companies have joined the corporation. In his words, therefore, “I want us to work together, to collaborate more so that ultimately, this industry is the best place to be and we in NNPC, we are poised in ensuring that we support our partners to make sure that they get the best so that the generality of our shareholders in Nigeria will benefit from the oil and gas industry.”
Comment here