The immediate past Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Kacalla Baru, spent only three years in NNPC, having come on board in July 2016. Records, however, show that he left a landmark and guide for his successor, writes EMEKA UGWUANYI.
On Monday last week, an elaborate valedictory was held for the immediate past Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Kacalla Baru.
The event offered top oil and gas industry players, diplomatic corps, and others opportunity to assess Baru’s stewardship in the corporation.
According to them, Baru, from the onset, was result-oriented and set out to achieve his objectives for the corporation.
To reposition the NNPC and make its operations efficient, Baru, in September 2017, presented a 12 Business Focus Areas (BUFAs), where he intended to institutionalise efficiency, profitability and growth in the Corporation. The 12 BUFAs included ensuring security of NNPC assets, developing new business models, settling Joint Venture (JV) cash call arrears, boosting production and reserve growth, growing crude oil production of NNPC’s exploration and production arm – the Nigerian Petroleum Development (NPDC) and gas development, developing renewable energy, focusing on frontier exploration undertaking oil and gas infrastructure development, developing new ventures, common services; and professionalism, accountability and staff welfare.
Recalling efforts made to actualise these goals, Baru stated that Nigeria’s crude oil average daily production recorded an upward swing of about 2.06million barrels last year, translating to a 10.75 per cent increment, compared to the 2017 average daily production of 1.86million barrels. Pitched against the low-level average daily crude oil production of 1.2million barrels in 2016 when he came on board.
“Nigeria has maintained a line of consistent year-on-year improvement. I make bold to say that the crude oil production increment was facilitated through the new business models we emplaced in NNPC’s old and new business entitles. Among the reengineered entities of the corporation that have made the difference are the NPDC, Nigerian Gas Company (NGC), Petroleum Products Marketing Company (PPMC), Duke Oil, NIDAS and Integrated Data Services Limited (IDSL).
“Indeed, NPDC was a major contributor to the industry’s success story in 2018, declaring 52 per cent daily crude oil production growth in 2018 compared with the company’s 2017 performance. NPDC’s average production from the company’s operated assets alone grew from an average of 108,000 barrels of oil per day (bopd) in 2017 to 165,000bopd in 2018, a feat regarded as the strongest production growth within the oil industry in recent times.
“The NPDC’s equity production share closed at over 207,000bopd, representing about 10 per cent of national daily production, was no less impressive. The company’s last average weekly production of 332,000 barrels per day makes the target of 500,000bopd for 2023 achievable. It is instructive to note that NPDC is now the largest supplier of gas to the domestic market, delivering over 700 million standard cubic feet per day (mmscfd) of gas to the Escravos-Lagos Pipeline System. These desired results were outcomes of initiatives emplaced by the management team under my purview. These initiatives include Asset Management Tea m (AMT) structure, Strategic Financing, Units Autonomy and security architecture framework.”
He also noted the 200,000bopd crude oil addition by the Egina field, which began production this year, adding that NNPC management under his watch saved $1.7billion from renegotiating Cash Call arrears of $6.8billion to $5.1billion with the corporation’s Joint Venture partners. The balance is scheduled for repayment over a five-year tenor plan. Already, the corporation has defrayed $1.5billion of the arrears.
He assured that NNPC would stick to the repayment deal with the JV partners as it transitions to self-funding Incorporated Joint Venture (IJV) model with the corporation’s partners. To ensure that the government did not default on cash call repayment agreement, the NNPC increased commitment to invest in the oil and gas industry, which has boosted the corporation’s credit profile internationally.
Other achievements include reduction in contracting cycle for upstream operations to nine months from an average of 24 months, with the corporation targeting a six months cycle, lowering of production cost, from $27 per barrel to $22 per barrel and improving on the security situation in the Niger Delta through constructive engagement and dialogue with relevant stakeholders.
Also, the NNPC has renewed focus on frontier basins leading to spud-in of Kolmani River-II Well on February 2, this year. Drilling on the well is nearing 10,000ft mark, even as the NNPC Frontier Exploration Services, the Division that superintends the inland basins exploration, recently moved to the Upstream Division of the corporation to afford it more visibility and empowerment to execute its mandate. The corporation also noted that activities were expected to resume in the Chad Basin as soon as there was green light on the security situation in the region.
In the midstream sector, NNPC has helped in increasing average national daily gas production. Last year, gas production was 7.90 billion standard cubic feet (bscf) as against 7.67bscf. Of the 7.90bscf produced in 2018, an average of 3.32bscfd (42 per cent) was supplied to the export market, 2.5bscfd (32 per cent) for reinjection/fuel gas, 1.3bscfd (16 per cent) was supplied to the domestic market and about 783mmscfd (10 per cent) was flared.
Domestic gas supply capacity was marginally stable at about 1700mmscfd with an average of 1.3bscfd supplied to the domestic market due to power evacuation challenges caused by frequency management, following rejection of allocated load by distribution companies (DisCos) as well as transmission line constraints. Of the 1.3bscfd supplied to the domestic market, an average of 71mmscfd went to the power sector, 470mmscfd supplied to the industries and the balance of 69mmscf delivered to the West African market through the West African Gas Pipeline (WAGP).
Baru stated that NNPC is expected to bridge the medium-term domestic gas supply deficit by 2020 through the corporation’s Seven Critical Gas Development Projects (7CGDPS). A reputable project management consulting firm is collaborating with an NNPC team to achieve accelerated implementation of the 7CGDPS. The full implementation of the project would boost domestic gas supply from about 1.5bscfd to 5bscfd by 2020, with a corresponding 500 per cent increase in power generation and stimulation of gas-based industrialisation, he added.
According to data, the power plants in the country have a permanent gas supply pipeline infrastructure and NNPC is committed to continue to expand and integrate its gas pipeline network system to meet increasing domestic gas demand. Key gas pipeline infrastructure projects on which significant progress had been made include Escravos-Lagos Pipeline System (ELPS II), Obiafu/Obrikom-Oben (OB3), Odidi-Warri Expansion Pipeline (OWEP), Trans Nigeria Pipeline Project (TNGP), Ajaokuta-Kaduan-Kano (AKK) Pipeline, Trans Nigeria Pipeline Project (TNGP) and Nigeria-Morocco Gas Pipeline (NGMP) Project.
In the refinery sub-sector, Baru said the NNPC is committed to the rehabilitation of the nation’s three refineries in Port Harcourt, Kaduna and Warri, to boost their capacity utilisation. In March, the first phase of the rehabilitation of the 210,000 barrels per day capacity Port Harcourt Refinery complex that comprises the 60,000 barrels per day built in 1965 and the 150,000 barrels per day, new refinery, was kick-started. The project is being executed by Milan-based Maire Tecnimont S.p.A, in collaboration with its Nigerian affiliate, Tecnimont Nigeria. At the end of the phase one, the Refinery complex should reach 60 per cent capacity utilisation. This first phase of the rehabilitation contract, which would run for six months would involve detailed integrity check and equipment inspection of the beginning from end of March, this year.
The integrity test comes as a forerunner to the second phase of the rehabilitation project, which entails a comprehensive revamp of the complex aimed at restoring the refinery to a minimum of 90 per cent capacity utilisation.
Subject to the successful completion of the integrity checks, Phase two of the project would be executed on Engineering, Procurement and Construction (EPC) by Tecnimont, in collaboration with the original builders of the plant, JGC of Japan. The rehabilitation of the other two refineries in Kaduna and Warri is expected to follow.
Baru noted that in the downstream sector, though early last year was riddled with some supply shortages, the corporation rose to the occasion with the support of President Muhammadu Buhari and the resilience and hard work of NNPC staff to keep the country wet soon after till date.
So far, many of the corporation’s depots had been resuscitated and put into use through decanting of over 140 million litres of PMS (petrol) nationwide with the rehabilitated systems 2B and 2E pipelines supplying petroleum products to Southwest, Southsouth and Southeast regions.
“NNPC is on track in respect of the corporation’s 12 key Business Focus Areas (BUFAs), and the vision of President Buhari to improve the status of oil and gas infrastructure through ensuring products availability to support national economic recovery and growth. The corporation will continue to plan for a better performance and achievement in 2019, especially with the continuous innovations and creativity in the downstream sector and the performance bond signed by all the relevant heads of the corporation’s operating units recently. Continuous improvement, a major plank of a world-class organisation, would remain NNPC’s key word in 2019, I assure you that our 2019 performance would dwarf the 2018’s,’’ Baru