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2 years of oil & gas Kyarinomics: NNPC scores more production, local refining, revenue

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By IKENNA EMEWU

Today is two years the Nigerian National Petroleum Corporation (NNPC) has been in the current oil and gas kyarinomics – the years of more crude oil production, dispute resolution, larger gas investment and prospects that would spell revival of local refining.

They are the years of the NNPC piloted by Malam Mele Kyari, the Group Managing Director.

In March this year when the contract for the rehabilitation of the Port Harcourt refinery was awarded, many argued that it was unnecessary. But Kyari had other ideas that made him take the position which later sounded convincing. He said the refining sub-sector should not be left in the hands of private refiners making in roads.

As he argued the cost benefits of refurbishment against cost of building new refinery he also noted that it would be so much risk and amount to energy insecurity if the refining of what Nigeria consumes be left with the private sector only. The CEO posited that the way NNPC broke the back of private marketers who held the nation by the jugular by opening fuel sales outlets, is the same way, refurbishing government refinery would put monopoly in check.

Our shame as a country has been the long standing irony of producing crude to export and conversely import refined derivatives.

From oil producing nation status, we crashed to crude exporter only.

As the years went by, the frontiers and limits of oil production per day kept dwindling as so many oil wells and mining licences trickled to seldom drops and sometimes actually ran dry.

These negatives kept pulling apart the ends of the nation’s economy that was already getting out of composure, and needed quick fix since Nigeria depends mainly on oil to pick the bills.

The oil exploration space had been gradually shutting down with lower operations and production with more and more Oil Mining Licences (OML) blocks falling into disuse.

To get the system back to life meant reviving those mining blocks. And at a time the sector is fast shifting more towards the gas sub-sector, to put more emphasis on the expansion of the gas streams became paramount to his objective.

More gas streams and crude channels means more income, reason NNPC under Kyari has scored more points in advancement.

The two years have seen the revival of six moribund OML targeting daily crude production of 3 million barrels and a national reserve of 40 billion barrels through also the expansion into new fields and hitherto undiscovered oil sites.

Crude security

“One of the goals the GMD set at his inauguration was to increase the national crude oil reserves to 40billion barrels. To achieve that goal, the GMD galvanized NNPC to rev up exploration work 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 with very high prospect of oil find. Seismic data collection is ongoing in the Bida and Sokoto Basins. Plans are also afoot to re-launch the exploration work in the Chad Basin. All these are geared towards boosting the nation’s crude oil reserves to meet the 40billion barrels target,” a source revealed. 

OML 25 revived

Reviving moribund OMLs

Six oil blocks that had led to production drop have been revived and working. A major one is the dispute involving Shell and Belema Oil that shut in over 30,000barrels per day production in OML 25. That dispute was effectively resolved to restore production in the oil block.

Kyari’s NNPC also 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.

“In May 2021, Mallam Kyari repeated a similar feat when he led the Corporation to sign a series of 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 $10billion investment in the development of the Bonga South-East Field. This will further boost the nation’s oil production,” ACE Mgazine was told.

The Mallam Kyari-led management has secured a number of alternative funding facilities for the NPDC and some of the Joint Ventures to facilitate further development of 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.

First oil of about 7,900bpd was achieved from the project on 1st April, 2020, while production is expected to peak at 94,000bpd of oil and 542mmscfd of gas within four years.  

Gas Development

“NNPC has focused heavily 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.

It has also “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 $20billion of revenue to the Government over the project’s lifecycle, 10,000 direct and 40,000 indirect jobs.

The Corporation followed that feat up in May 2020, 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. The contract was signed with the SCD JV Consortium comprising affiliates of Saipem, Chiyoda and Daewoo.

These landmarks are expected to raise the NLNG production capacity by 35 per cent from the current 22 million tonnes per annum (MTPA) to 30 MTPA.

“On 15th June, 2021, the ground-breaking ceremony of the NLNG Train 7 Project was conducted signaling the commencement of construction work on the project.”

The AKK gas pipeline

Stable product supply and availability

The downstream has not been left out in the total revival journey of the NNPC. 

“As the sole importer of petroleum products in the country, NNPC has succeeded in keeping the nation well supplied. NNPC has emplaced a stable fuel supply system to guarantee zero fuel queues throughout the country in the last two years of Kyari.

The Corporation is in the process of 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.”

Refining

“Another goal that the GMD set for his management at inauguration in 2019 was the rehabilitation of the refineries. Mallam Kyari has made good on that promise by driving the rehabilitation project to an advanced level. On 6th April, 2021, he led NNPC to sign the $1.5bn Engineering, Procurement & Construction (EPC) Contract Agreement with Tecnimont SpA, for the complete rehabilitation of Port Harcourt Refinery.

On 7th May, 2021, the GMD led NNPC and the contractor, Tecnimont S.p.A., to flag off construction work on the Port Harcourt Refinery rehabilitation project.

He is in the process of making good his promise to introduce a new operational model for the refineries post-rehabilitation with the call for bids for the Operations & Maintenance Contract for the refineries advertised recently in the media. The O & M model would ensure that the refineries are managed by contractors with requisite experience.

An open system

NNPC, SEPLAT sign deal

Contrary to the norm of the NNPC, a monthly and regular publication of the audited account of the corporation has been sustained.

The accounts have been published in the countr’s media consistently, thereby introducing a new chapter of running an open and accounatble system.

At his inauguration, he had vowed to do that, emphasizing that transparency and accountability would be the cardinal pillars of his management.  

“The 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. The AFS were published in the Corporation’s website for all interested parties to access and scrutinize. This is the first time the Corporation’s AFS were made public in such a manner.” 

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