Mallam Mele Kyari, GMD, NNPC
-By Felix Douglas
…Appreciated the unalloyed support of the media to the Corporation
…NNPC now administered under transparency and openness of operations to meet international standards
…NNPC to transform Nigeria into net exporter of petroleum products
…Allegations of non-remittance of funds accrue to the Federal Government untrue
After resuming office as the Group Managing Director of Nigeria’s state-owned oil company, Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kolo Kyari has rejuvenated the Corporation with deeper engagement to stakeholders, with a view to carrying them along in terms of innovative ideas and happenings of the organisation.
As part of his effort to run NNPC through transparency and openness, the GMD had engagement with energy correspondents. He described “the Media, as the Fourth Estate of the Realm, as a critical stakeholder because we know that without it, all our efforts at reforming and transforming the Corporation from an integrated oil and gas company into an energy company would end up like one winking in the dark.”
He appreciated the unalloyed support given by the media to the NNPC over the past one and half years and encouraged it to continue to enlighten Nigerians on the Corporation’s operations and activities.
Kyari told energy correspondents that the promise he made when he was inaugurated that he would make NNPC’s operations transparent is now possible. “Over the past one and a half years, we have tried to keep that promise by sustaining the publication of our Monthly Financial and Operations Report (MFOR). No company, to my knowledge does this.”
The NNPC GMD revealed that in terms of transparency, the state-owned oil company has been publishing its Audited Financial Statement for 2018 and 2019 financial years on its website for all interested persons to see the significant turnaround of the company’s performance recording 99.8% year-on-year. The company has also launched the Open Data portal on its website where such information about its staff strength and asset base are published.
To buttress its transparency drive, NNPC signed on as an Extractive Industry Transparency Initiative (EITI) Partner Company, to join a group of over 65 extractive companies, state-owned enterprises, commodity traders, financial institutions and industry partners who commit to observing the EITI principles by promoting transparency in all facets of its operations and transactions.
Kyari submitted that there is no information about NNPC operations that is not in the public domain. “I can say that we have kept our word as far as transparency and accountability are concerned. We will continue to do more until the word opacity is no longer associated with the Nigerian Oil and Gas Industry.”
One of the major promises that the GMD made as he took over the headship of NNPC was that in the core business, he would boost exploration and production with a view to raising national reserves to 40billion barrels and production to 3million barrels per day. The reality on ground shows that this has been attained.
The NNPC helmsman explained that the Corporation has revved up exploration work in the inland basins culminating in the oil find in commercial quantity, in the Upper Benue Trough. The drilling of Kolmani River III Well is ongoing with very high prospect of oil find. Seismic data collection is ongoing in the Bida Basin and it is re-launching exploration work in the Chad Basin.
NNPC resolves a number of disputes that hampered production activities with a view to boosting production to meet the 3million barrels per day production target. Key among these are dispute involving Shell and Belema Oil that shut in over 30,000barrels per day production in OML 25. It has executed the Abo OML 125 Heads of Terms leading to the resolution of the issues around most of the deep offshore production sharing contracts, paving way for eventual renewal of OML 125 and further investment in exploring the lucrative field.
The Corporation secured a number of alternative funding facilities for the NPDC and some of its Joint Ventures to facilitate the development of some of its assets. These include: the N875.75m NPDC OML 65 Alternative Funding and Technical services package with CMES-OMS Petroleum Development Company, the $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.
OML13 First oil of about 7,900bpd was achieved from the project on 1st April, 2020, while production is expected to peak at 94,000bpd and 542mmscfd within four years.
The Covid-19 pandemic and the subsequent OPEC-Plus agreement to cut production has impacted plans and activities with regard to production growth.
Notwithstanding, Kyari pointed out that much has been achieved in terms of growth despite the challenges that Covid-19 posed to the industry, “we are just waiting for normalcy to return to the industry to unleash some of these projects.”
The NNPC boss reiterated the Corporation aggressive investment in gas to take advantage of the energy transition and get Nigeria ready for the future in the face of the dwindling fortunes of petroleum liquids.
He emphasised on the need to shift to gas owing to the uncertainty of oil price. Kyari noted that Nigeria is more of a gas nation than oil hence there will be concentration on gas production since the country has natural gas reserves in abundance
He mentioned NLNG Train 7 and other gas infrastructure projects such as the Escravos-Lagos Pipeline System Phase 2, Obiafu-Obrikom-Oben (OB3) gas pipeline, Ajaokuta-Kaduna-Kano (AKK) gas Pipeline. While the Integrated Gas Handling Facility in Edo State is billed for commissioning soon.
These projects are aimed at ensuring that Nigeria takes its rightful place in the emerging global energy order where natural gas is envisaged to play a pivotal role.
Downstream operations is also experiencing an upswing with the introduction of Operation White which has helped NNPC in streamlining petroleum products importation, supply and distribution across the country.
Kyari assured energy correspondents that the arrangement in place to sustain fuel supply across the country is solid and the Corporation will continue to maintain zero fuel queues throughout the yuletide season into 2021
He said even though gasoline price is as high as N464/litre in Niger and more than double that of Nigeria which is N160/litre range in most west African countries, “NNPC will continue to ensure Nigerians benefit from lowest comparative prices in West Africa and beyond.”
“We are in the process of strengthening the products distribution system by revamping our pipeline network through a Build, Operate and Transfer (BOT) model whose process is already at an advanced stage.”
Kyari was of the view that the vision of revamping the pipelines is in tandem with the Refineries Rehabilitation Project which the Corporation promised to deliver by 2023.
However, the funding challenge which had stalled the second phase of the rehabilitation of the Port Harcourt Refinery has been resolved. The contract for the second phase will soon be awarded and work will commence in Q1 of 2021.
In the meantime, NNPC is supporting private sector investors who are driving a number of refinery projects across the country to promote local refining with a view to attaining self-sufficiency in refining and transforming Nigeria into a net exporter of petroleum products.
The GMD clarified to energy correspondents that there is no iota of truth in the allegations making the rounds that NNPC failed to remit funds that should accrue to the Federation and that it illegally withdrew money from the NLNG Dividends Account. Such is not possible under the TSA arrangement.
He said despite achievements recorded by the state-owned company, “the year 2020 has been a difficult year for the industry and the world economy.” The industry fundamentals have changed, and a lot of companies are struggling to adapt to the new normal. “But the earlier we adapt the better our chances of succeeding through this difficult time.”
Companies including Automobiles, Airlines, Hospitality and Financial Institutions were constrained to rationalize workforce in line with their declining revenues, while to some businesses, it was just the end of the game.
The impact on oil and gas operations is tremendous as crude oil price turned negative for the first time in history of the sector with rigs disappearing from oil fields.
According to industry analysis carried in Q1, 2020, E&P Companies are at risk of losing about $1 trillion in revenue by the end of 2020.
With new lockdown orders due to resurgence of COVID-19 in Europe and other industrial Nations, the estimated revenue shrinkage may likely grow above Rystad Energy estimates by the close of 2020.
This financial impact and the resultant poor liquidity position are making funding of both existing and new projects more difficult as companies cut spending and defer projects.
Kyari projected that NNPC being a National Oil Company, its “natural response to situation like this is not to shut down operations owing to the linear relationship between the oil industry and our Nation’s economy. What therefore first come to mind is how to survive and sustain our operations.”
In today’s COVID-19 defined market, sustaining operations and making progress means that all stakeholders must recognize the need to improve efficiency, reduce costs, eliminate wastages, entrench accountability, act with transparency and embrace technology and innovation to drive performance and value realization across strategic investment portfolios, the GMD added.
The NNPC boss urged the media being fourth estate of the realm, to continue to support the Corporation and reach out to it to verify any information concerning the NNPC and the oil and gas industry so that Nigerians will be acquainted with correct and true information for national growth.
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