Yesterday, the Group Managing Director of the Nigerian National Petroleum Corporation, Mallam Mele Kolo Kyari, completed two years in office. While stakeholders agree that it has been a good journey so far, they, nonetheless, submit that there is room for improvement, reports MUYIWA LUCAS.

The Group Managing Director (GMD), Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, may be unassuming. But owing to the quantum of his responsibilities, he has had to shout himself to the rooftops.

“One of my goals is to increase the  national crude oil reserves to 40 billion barrels and to boost the nation’s oil production to three million barrels per day,” Kyari said upon his assumption of office as the 19th GMD of the corporation.

Upstream

To achieve the goals set out for the nation’s 40 billion barrels crude reserve, the NNPC was galvanised to rev up exploration in the inland basins with the drilling of the Kolmani River II Well, culminating in oil find in commercial quantity in the Upper Benue Trough. The drilling of Kolmani River III Well is ongoing. Experts say there is a very high prospect of finding oil in this river. Besides, seismic data collection is ongoing in the Bida and Sokoto basins, just as plans are also afoot to re-launch the exploration in the Chad Basin.

Yet, to attain the three million barrels per day oil production capacity, disputes around some oil blocks that had led to production shut-in are said to have been resolved. For instance, the resolution of the dispute involving Shell and Belema Oil that shut in over 30,000barrels per day production in OML 25 has been resolved, thereby restoring production in the oil block. Insiders close to the NNPC say the corporation 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. This paved the way for the renewal of OML 125 and further investment in the exploration of the lucrative field to boost the nation’s crude oil production.

Recently, last May, Kyari led the corporation to sign agreements with SNEPCo and other PSC partners to resolve the disputes around another deep offshore block, OML 118, leading to the renewal of that acreage with the prospect of a new $10 billion investment in the development of the Bonga Southeast Field. This will further boost the nation’s oil production. This is aside the corporation securing some alternative funding facilities for the NPDC and the Joint Ventures to facilitate further development of assets. These include: the N875.75 million NPDC OML 65 Alternative Funding and Technical Services package with CMES-OMS Petroleum Development Company; the $3.15 billion Alternative Financing Package with Sterling Exploration and Energy Production Company Limited (SEEPCO) and other partners for the development of NPDC’s OML 13. Interesting, first oil of about 7,900bpd was achieved from the project  in April, 2020, while production is expected to peak at 94,000bpd of oil and 542mmscfd of gas within four years.

Downstream

Stakeholders in the downstream sector agree that the NNPC’s Downstream operation has been improved on following the introduction of “Operation White”, which has helped in streamlining petroleum products importation, supply and distribution across the country. Besides, as the sole importer of petroleum products in the country, Emmanuel Okafor, chief executive of an oil serving firm, is convinced that the NNPC has succeeded in keeping the nation well supplied with oil. He argued that the Corporation in the last one year has been able to emplace a stable fuel supply system to guarantee zero fuel queues throughout the country. Specifically, he praised the NNPC for its intervention in preventing fuel pump price increase in the last three months.

Still, the corporation is strengthening the products distribution system by revamping the pipeline network through a Build, Operate and Transfer (BOT) model whose process is already at an advanced stage. This is in line with the policy of revamping the pipelines in tandem with the Refineries Rehabilitation Project to ensure that products evacuation facilities are in top shape to support the operations of the refineries post-rehabilitation in 2023.

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The signing of an agreement with the Nigerian Content Development and Monitoring Board (NCDMB) and Zed Energy for the construction of the N10.5 billion Brass Petroleum Products Terminal, also serves as a means of boosting petroleum products supply and distribution in riverine areas of the Niger Delta. This facility will serve as a strategic reserve as it is expected to provide a depot for 50 million litres of petroleum products, two way product jetty, automated storage and automated bay for AGO, PMS, DPK and ATK.

Refineries Rehabilitation

Last April, a fresh breath came for the Nigerian refineries, as the NNPC signed a $1.5 billion Engineering, Procurement & Construction (EPC) Contract Agreement with Tecnimont SpA, for the rehabilitation of Port Harcourt Refinery, and flagged off the construction work in May. Yet, the Warri Refinery and Petrochemical Company (WRPC) and Kaduna Refinery and Petrolchemical Company (KRPC) EPC contracting has progressed to advanced stage with a certificate of no objection secured from BPP on the award of the contract. Currently, it is awaiting FEC approval for award.

At present, the corporation has introduced a new operational model for the refineries post-rehabilitation with the call for bids for the Operations & Maintenance Contract for the refineries. The O & M model would ensure that the refineries are managed by contractors with requisite experience who would ensure that they are maintained.

Transparency

In ensuring transparency, Kyari instituted the Transparency, Accountability and Performance Excellence (TAPE). This has opened up the corporation’s books to the public by way of publication of the 2018 and 2019 Audited Financial Statements of the corporation and its 19 subsidiaries registered under the Companies and Allied Matters Act (CAMA) 1990 as amended alongside that of the National Petroleum Investment and Management Services (NAPIMS) to provide clarity on Joint Venture finances and published on the NNPC website.

A major revelation in the Audited Financial Statements (AFS) of the two years so far published is the 99.7 percent reduction of the corporation’s loss profile from N 803 billion in 2018 to N 1.7 billion in 2019.  Financial experts are convinced that going by this trajectory, the corporation is likely to declare profit in the 2020 AFS which is billed to be released soon.

The Kyari-led management also sustained the publication of the corporation’s Monthly Financial & Operations Reports (MFOR) in line with the TAPE vision. “NNPC remains the only national oil company that publishes its financial and operations reports monthly globally,” a top management staff member of the corporation noted.

The GMD also led the corporation to enlist with the Global Extractive Industry Transparency Initiative as an EITI Supporting Company, which mandates places NNPC in the group of over 65 extractive companies, state owned enterprises that commit to observing transparency and accountability standards defined by EITI.

Gas Development

NNPC has focused on the gas sector in keeping with the aspiration of the administration to diversify the economy by transforming the nation into a gas driven economy. In this regard, NNPC drove and achieved the Final Investment Decision on the NLNG Train 7 Project in December 2019. The project was on the drawing board for over 10 years. The project is expected to generate over $20 billion revenue to the government over the project’s lifecycle, 10,000 direct and 40,000 indirect jobs.

Interestingly, this was consummated in May, last year, at the heat of the COVID-19 pandemic, with the signing of the Engineering, Procurement and Construction (EPC) contract of the NLNG Train-7 project with the SCD JV Consortium comprising affiliates of Saipem, Chiyoda and Daewoo. The execution of the EPC contract signals the effective commencement of the detailed design and construction phase of the multi-billion dollar project which, on completion, is expected to raise the NLNG production capacity by 35 per cent from the current 22 million tonnes per annum (MTPA) to 30 MTPA. Recently, precisely on June 15, the ground-breaking ceremony of the NLNG Train 7 Project was conducted signaling the commencement of construction work on the project.

NNPC also kicked off the construction of the Ajaokuta-Kaduna-Kano (AKK) gas pipeline project on June 30, 2020. The project which has been described by the President as a game-changer is an integral part of the Trans-Nigeria Gas Pipeline (TNGP) with a capacity to transport about 2.2billion cubic feet of gas daily.

By and large, stakeholders reckon that while the corporation may have been on a steady ship to progress, there is still room for greater improvement in the days ahead.