Stakeholders in Nigeria’s oil sector have said that the nation’s energy landscape is witnessing profound transformation with government wielding the political will to provide leadership by entrenching fiscal policies that had eluded the country’s oil and gas industry for decades.
The unveiling of the Nigerian National Petroleum Company Limited, NNPCL, in 2021 as a Company and Allied Matters Act (CAMA) firm, as encapsulated in the Petroleum Industry Act (PIA), according to them, provided the ground for a reformed national oil company that is ready to compete with its peers globally.
Before the PIA, many had seen the former NNPC, of not having an enviable past because of the loss of faith by Nigerians and its partners in its operations. But the stakeholders said that perception has since changed with the implementation of the PIA under the leadership of the group chief executive officer of the NNPC Ltd, Mele Kyari.
For instance, Aliko Dangote, who has made a deep inroad in the industry and whose investment in the oil refinery space has been globally acknowledged, has observed critical transformation in the NNPCL.
He advised as a private sector operator that as a manager, NNPCL principal objective should focus on delivering strong returns; growing the investment portfolio and managing portfolio risks. He also pointed out that the NNPC must first look into the cost component of its production.
For decades, the commercialisation of the Nigerian National Petroleum Corporation had been the subject of discussions among critical stakeholders in the oil and gas sector. But there was hardly any framework for its implementation. Indeed, under the current management led by Kyari, the 44-year-old NNPC joined the global Extractive Industries Transparency Initiative (EITI). It also declared its first profit in about four and a half decades, released its Annual Financial Report to the public and has generally been more open to public scrutiny.
With the company now fully transitioned into a commercial entity, stakeholders are now seeing a new NNPC that is ready to do things differently. For instance, at the just concluded 2023 Upstream Investment Management Services Ltd (NUIMS) Annual Value Assurance Review (AVAR) Workshop, Africa’s richest man and the Chairman of Dangote Group, Aliko Dangote; Chairman of Heirs Holdings Ltd, Mr Tony Elumelu; Deputy Managing Director, Deepwater Asset, TotalEnergies Upstream Nigeria Limited (TUPNI), Mr Victor Bandele; the Managing Director of Shell Nigeria Exploration & Production Company (SNEPCo) Mrs Elohor Aiboni and other critical stakeholders expressed their appreciation to the leadership of the Nigerian National Petroleum Company Ltd and the NNPC Upstream Investment Management Services (NUIMS) for the level of collaboration geared towards delivering key projects to unlock value for stakeholders.
The AVAR is a strategic forum where key issues that shape the oil and gas upstream business landscape are reviewed, and the direction is set with the sole objective of guaranteeing short-term success and long-term value is delivered to all stakeholders. This year’s event with theme, ‘Consolidating for Growth in PIA Era.’ was attended by the group chief executive officer of the NNPC Mele Kyari; the executive vice president (Upstream), NNPC Adokiye Tombomieye; the chief upstream investment officer, NNPC Upstream Investment Management Services, Bala Wunti; the Chairman, Heirs Holding, Tony Elumelu and other top investors in the Nigerian economy.
Dangote said that the NNPC Ltd has what it takes to become the African version of Saudi Arabia’s Aramco, adding that the oil giant can generate billions of dollars in revenue if the right decisions are made. According to him, the PIA brought the transformation of NNPC from a government establishment to a commercial entity with no recourse to government funding.
He said, “I truly believe that NNPC should be our African Aramco. You have what it takes to take you up there and I am very happy. There is nothing that is impossible. You can make it possible and don’t let anything scare you. It is just the same thing with us. If I tell you about our own story, you will be shocked as to how. It wasn’t only the refinery that we started about six years ago. We had 32 projects that we all rolled out at the same time.’’
Similarly, the chairman of Heirs Holdings Ltd, Mr Tony Elumelu lauded the NNPC for the effort it made to curb crude oil theft. According to Elumelu, due to the efforts of the NNPC Ltd, Heirs Oil & Gas has witnessed 96 per cent recovery rate. Elumelu said, “When I listened to the Group CEO speak today, talking about us moving to 2.5 million barrels we challenge him to do more. I believe that it is achievable. From losing 97 per cent of our 50,000 barrels production, interestingly and it will be bad of me to have this platform and not share this here.
“That day, I got a call from the GCEO and I thought he was going to kill me for speaking up, to my greatest surprise, he said to me Tony we are sorry about what is happening, we are doing something about it, it will be corrected.’’
Speaking also, the deputy managing director, Deepwater Asset, TotalEnergies Upstream Nigeria Limited (TUPNI), Mr Victor Bandele, said the intervention of Kyari has unlocked fresh 30,000 barrels per day of crude oil from OML 130. Bandele’s expressed his deepfelt appreciation for the Group Chief Executive Officer’s patriotic intervention in enabling the deepwater Production Sharing Contract (PSC) to engage the services of Gerry De Souza Drillship to commence the long-due drilling campaign of seven development wells and one exploratory well.
Sharing her thoughts at the event, the managing director of Shell Nigeria Exploration & Production Company (SNEPCo) Mrs Elohor Aiboni expressed her appreciation to the leadership of NUIMS on the level of collaboration geared towards maximizing the potential of the deepwater assets and delivering key projects to unlock value for stakeholders.
Also speaking at the event, Kyari said the challenges facing the oil and gas industry globally has made it compelling for the NNPC to come with more ingenious ways of doing things. He admitted that there have been challenges with security and underinvestment in recent times, adding that with the passage of the Petroleum Industry Act, the NNPC is better positioned to create value for Nigerians.
He said, “The crux of the industry is to make sure the upstream industry works. If the upstream works, there would be cash in the country. We are in cash crunch in the country today, we are in forex crunch today because the upstream has not gotten to a level where we can have surplus to support the economy.
“And the reason is because we have challenges of security, decarbonization issues, energy transition, and reluctance of finance institutions to lend. The practicality of all these is that there is difficulty in having access to capital today and this is very obvious, the whole world is lamenting today and there is absolute supply gap in gas in the market in the short term and for a while to come and everyone is taking a step backwards on what could be done to arrest the situation.
“As a company, NNPC is leading this process, we are required to ensure that production cost is optimum, we have interest in nearly every business in the upstream sector and even in the midstream and our performance determines what happens in the industry. We are in a position to go back to normalcy. Production target that we have kept over the years of 2 million barrels are realizable but have remained on the powerpoint and this is the time to take them off the powerpoint and resolve the insecurity, investment and financing issues.”
As a National Oil Company, Kyari said the NNPC must cooperate with its partners to solve the energy challenges facing the country. He said it is only through collaborative efforts with its stakeholders and partners that the NNPC can guarantee energy for the nation’s industrialization.
Kyari added, “We can solve the problem of energy poverty in the country, we can also support the rest of the world particularly West African countries to resolve the energy crisis that we are facing today. We can also help to resolve the issue of food security and by doing this, we will make more money for the country and businesses make more money. We will invest in power and we are doing it and we believe that at the end of the day, we will create sufficient power for the country so that industries will spring up everywhere and create that prosperity that we desire.
“We have the best of workforce that we have anywhere in the world and we have seen many things that they have done. This means that our short term is real, our short term is achievable and as a company, we will satisfy the requirements of our partners and shareholders.
“Our performance will speak for our us and our country and this is what we are focused on doing, we will work with you, we will work with the industry, we will work with our partners, we will work with our shareholders and ultimately, we will deliver value in a short time of three years and this is sufficient to bring all the value on the table. “We are getting all the support from the security agencies to make sure this works and we are getting maximum cooperation and we will overcome the security challenges and this company will deliver value for all of us.”
