By Erasmus Ikhide
Crude oil was discovered in commercial quantity in Nigeria in Oloibiri
in present day Bayelsa State in 1956; four years before the British
granted us political independence. A school of thought believes that
if the discovery had been made earlier, the Caucasians would never
have fully departed the country and we would have had White Nigerians
in a similar manner like what obtains in South Africa.
The black gold as it is fondly called has been tragically more of a
curse as it has elevated a culture of sloth and lack of innovation
which has done nothing but greatly impoverish us. Who could have
believed that the revolutionary strides undertaken by the late sage
Chief Obafemi Awolowo while he held sway as Western Region Premier
between 1952 and 1959 was from the proceeds of cocoa and other
agricultural produce?
The Nigerian National Petroleum Corporation (NNPC) was established on
April 1, 1977 by the military government of the then General Olusegun
Obasanjo but since then it has been involved in an endless cobweb of
corruption and cesspit of ineptitude.
Mele Kolo Kyari was appointed as the 19th Managing Director of the
Corporation on July 8, 2019. Many critics of the Buhari led government
criticized him to the High Heavens as another northern appointment and
opted to throw away the baby with the bath water.
Days after his appointment, he unveiled Transparency, Accountability
and Performance Excellence (TAPE), a five-step strategic roadmap for
NNPC’s attainment of efficiency and global excellence.
According to a report done by Premium Times, He said the five steps
for realizing the objectives of TAPE were to ensure:
1.NNPC opened up its systems to public scrutiny;
2. Its operational processes were made transparent and accountable to
the Nigerian people and the government;
3.The new system would operate along with well-defined operational
processes, benchmarked against established global best practices by
world-class oil and gas companies;
4. Set the right operational cost structure, to guarantee
value-addition towards NNPC’s sustained profitability, and
5. Set achievable goals, priorities and performance standards and
criteria, by developing suitable governance structures for its
strategic business units, and the entrenchment of team-spirit, work
ethic and collaboration with all key stakeholders to achieve set
corporate goals.
So far the objectives of TAPE have been met.
He initiated bold minded reforms in the upstream sector. His
creativity saw an alternative financing deal for the Nigerian
Petroleum Development Company (NPDC). Within the last one year, Kyari
ensured the execution of a funding and technical services agreement
(FTSA) as well as a alternative financing deal for NPDC’s OML 13
valued at about $3.15 billion and OML 65 for $876 million. These
agreements resulted is a 32% and 21% incremental production output in
OMLs 40 and 30.
Also, 14 companies participated in the auction for the financing and
redevelopment of OML 119 operated by the NPDC. The twin offshore block
made up of Okono and Okpoho fields located approximately 50 kilometres
offshore south-eastern Niger Delta operated by ExxonMobil.
Kyari described OML 119 as one of NNPC’s critical projects, which
aligns with the Federal Government’s aspiration to boost the country’s
crude oil and gas production, growing reserves, and monetizing the
nation’s enormous gas resources.
He has also revised the unit costs for joint ventures (JV) and
production sharing contracts (PSC).
He has also been able to save costs for the government through NNPC’s
revision of joint venture and production sharing contract (PSC)
operators’ unit costs, down to $19 per barrel and $18.3 per barrel,
from the initial $31 per barrel and $24.3 per barrel respectively.
Concerned about the impact of high oil production cost on the
government revenue, Kyari has, in the last one year, demonstrated
commitment to achieving the industry target of reducing oil production
cost to an average of $10 per barrel by 2021.
Under Kyari’s management in the last one year, the NPDC also acquired
four new oil acreages (OMLs 11, 24, 116 and 98, while recovering debts
for gas supplies totaling about N16.64 billion and $3.55 million.
There has also been sustainable average oil output under his pragmatic
leadership. Despite the challenges in the oil and gas industry, Kyari
was able to ensure the NNPC subsidiary in charge of the government
investment interests in the oil industry joint venture projects, the
National
Petroleum Investment Management Services (NAPIMS), was able to achieve
an average oil production capacity of 1.8 million barrels per day
prior to the recent decision by the Organization of Petroleum
Exporting Countries (OPEC) to cut its members’ output to boost crude
oil prices and stabilize the oil market.
Kyari has also supported NAPIMS to secure external funding for the
SPDC’s Santolina 3 projects expected to deliver an average production
of 16,300 barrels of oil per day, while also superintending over the
resolution of the Escravos gas-to-liquids (EGTL) cost dispute with
Chevron Nigeria Limited (CNL).
Nigeria LNG Train 7 FID
For almost two years, the final investment decision (FID) for the
construction of Train 7 of the Nigeria LNG project was delayed. The
NNPC and other partners in the project could not come together to
commit to the development of the project.
The outbreak of the coronavirus last year worsened the problem as the
global economy came to a virtual standstill. But, Kyari did not allow
all the crises to rob Nigeria of all the benefits derivable from the
execution of the project.
At the height of the global pandemic, Kyari ensured the NNPC and its
JV partners, including Shell, Total, and ENI, came together to execute
the NLNG T7 FID on December 27, 2019. He went ahead to mobilize for
the signing of the engineering, procurement and construction (EPC)
contract for the project awarded to the Saipem, Chiyoda and Daewoo
(SCD) JV Consortium.
The signing of the contract signaled the commencement of EPC
activities for NLNG T7 Project. On completion, the production capacity
of the six-train plant would expand exponentially by 35 per cent, from
the extant 22 million tonnes per annum (MTPA) to 30 MTPA, and boost
Nigeria’s competitiveness in the global LNG market.
The project has the prospects of further attracting foreign direct
investment (FDI) in excess of $10 billion to Nigeria.
The AKK Pipeline Project
Just as Nigerians were jubilating at the milestone on the Nigeria LNG
project, Kyari ensured President Muhammadu Buhari launched the EPC
activities on the 614 kilometers-long Ajaokuta–Kaduna–Kano (AKK)
pipeline project by NNPC last week.
Considered to be at the heart of the country’s economic growth, Kyari
has pursued the execution of the project with single-minded commitment
to see that it is completed on schedule in 2023.
The pipeline project represents phase one of the 1,300 kilometre-long
Trans-Nigerian Gas Pipeline (TNGP) project being developed as part of
Nigeria’s Gas Master Plan to utilize the country’s surplus gas
resources for power generation as well as for consumption by domestic
customers.
The TNGP project also forms part of the proposed 4,401 kilometre-long
Trans-Saharan Gas Pipeline (TSGP) to export natural gas to customers
in Europe.
Uninterrupted Fuel Supply
Prior to his appointment, hiccups in the supply of petroleum products
were a common feature in the Nigerian economy. The incessant
disruptions in fuel supply affected Nigerians’ ability to plan
effectively. They could not predict when the next fuel scarcity would
hit the country and send families to spend days and nights in long
fuel queues at filling stations.
Kyari leveraged on the existing Direct-Sales-Direct-Purchase (DSDP)
product supply arrangement he started and sustained while in office as
the GGM COMD of the NNPC, to guarantee energy security for Nigerians.
2020 crude oil lifting contracts
In August 2019, a few weeks after his inauguration, Kyari announced
the issuance of fresh crude oil lifting contracts to 15 local and
international oil marketing and trading consortia/companies under the
2020 DSDP scheme.
With the country’s four refineries still operating far below their
installed capacities, and unable to produce enough to meet the
country’s daily national consumption need for petroleum products, the
15 contractors were to utilize the 445,000 barrels per day crude oil
allocation for local refining to bring into the country petroleum
products for domestic consumers.
But, Kyari said the difference in the latest issuance of the oil
lifting contracts was that this would be the first time since the DSDP
programme began in 2016 that the NNPC would officially be making
public the list of all the contract winners.
Kyari said revealing the names of the beneficiaries to the public was
a new normal for NNPC as part of the policy direction, pledge and
commitment of his management to transparency and accountability in
NNPC’s operations going forward.
To sustain the era of uninterrupted supply of petroleum products,
Kyari assured that his management would continue to revamp downstream
infrastructure to guarantee availability of 90 per cent pipeline for
fuel distribution; ensure automation of the fuel distribution system,
and grow NNPC Retail’s market share to 30 per cent.
“Operation White”
To build on the success of the DSDP programme, entrench energy
security and deepen transparency in petroleum products supply and
distribution, Kyari, in collaboration with the Minister of State for
Petroleum Resources, Timipre Sylva, initiated an innovative programme,
“Operation White”, to curb products diversion and smuggling, and
ensure that the entire country was kept continuously wet with
petroleum products.
Under the initiative, a team of 89 officials drawn from various
government agencies involved in the petroleum products supply process
was inaugurated, tasked with the responsibility of monitoring and
tracking fuel distribution and consumption throughout the country.
The team included representatives from the NNPC, Department of
Petroleum Resources (DPR), Petroleum Products Pricing Regulatory
Agency (PPPRA), Petroleum Equalization Fund (PEF) as well as the
Department of State Security (DSS).
Under the initiative, Kyari ensured actual volumes of petroleum
products imported and consumed in the country were authenticated. The
NNPC now has a customer express solution and online marketers’ portal,
which is live for oil majors and Depot and Petroleum Products
Marketers Association of Nigeria (DAPPMAN) to monitor loading and
lifting of petroleum products from NNPC depots. Plans are on course
for the system to go live for members of the Independent Petroleum
Products Marketers Association of Nigeria (IPMAN) by the end of the
second quarter of 2020.
These achievements are by no means all that can be credited to the Lee
Kuan Yee like visionary leadership of Kyari and we in the media have
the duty to praise our public officials when they do well so that we
don’t become permanent Rottweilers.
A Daniel has indeed come to judgement!
Erasmus Ikhide is a media strategist and can be reached via:
ikhideerasmus@gmail.com; 08035032123
