ENTRENCHMENT OF TRANSPARENCY AND ACCOUNTABILITY
In the past, the NNPC was described as a cesspool of corruption. Deep-seated illegality, abuse of financial procedures inefficiency and mismanagement had characterized its operations, leading to outright theft of the nation’s oil wealth. On assumption of office, Kyari vowed to entrench transparency and accountability in all the Corporation’s operations. Unlike in the past when nobody could see what the NNPC’S books were like, whether it was operating at a loss or at a profit, the Corporation now opens its books for public scrutiny. It, in 2016 commenced the publication of its MontlyFinancial and Operational Report (MFOR).
To match his words with actions and in line with his TAPE vision, Kyari has continued to open up the books of the Corporation the way no other GMD before him had done. He has also not only sustained the regular publication of the MFOR, the NNPC under Kyari’s watch published the 2018 and 2019 audited financial statements (AFS) and accounts 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 a major milestone for a company whose activities were hitherto shrouded in secrecy. A major revelation in the AFS of the two years so far published was the 99.7% reduction of the Corporation’s loss profile from ₦803bn in 2018 to ₦1.7bn in 2019. Following this trajectory, the Corporation is likely to declare profit in the 2020 AFS, which is billed to be released soon.
Kyari also led the NNPC 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.
The Highpoint of Kyari’s drive to entrench a new regime of transparency and accountability in the NNPC was the creation of an anti-corruption desk in the Corporation. The unit engages the Economic and Financial Crimes Commission (EFCC) and other anti-corruption agencies on a regular basis. The desk ensures that staff members complies with the code of conduct procedures with consequence management.
The GMD’s commitment to the war against corruption, and the setting up of irreversible processes and structures that would ensure transparency and accountability has earned him acclodes from organisations within and outside the country. The Nigerian Senate has also commended the Kyari-led NNPC management for its efforts towards entrenching transparency and stamping out corruption from its system.
UPSTREAM SECTOR
Kyari had promised to raise the national crude oil reserves to 40billion barrels, a target set by successive administrations in the NNPC but was never met. To achieve that goal, he 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 were geared towards boosting the nation’s crude oil reserves to meet the 40billion barrels target.
He also promised to boost the nation’s oil production to 3million barrels per day. To achieve that target, he swiftly moved to resolve disputes around a number of oil blocks that had led to production shut-in.
A case in point was the resolution of the dispute involving Shell and Belema Oil that shut in over 30,000barrels per day production in OML 25. The dispute was effectively resolved and production restored in the oil block.
The GMD also led the Corporation to execute 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.
In furtherance of the goal of boosting the nation’s crude oil production, the Mele 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 April 1, 2020, while production is expected to peak at 94,000bpd of oil and 542mmscfd of gas within four years.
DOWNSTREAM SECTOR
The downstream sector is also experiencing boom under Kyari with the introduction of Operation White which has helped in streamlining petroleum products importation, supply and distribution across the country.
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.
The vision of revamping the pipelines is in tandem with the refineries rehabilitation projects to ensure that products evacuation facilities are in top shape to support the operations of the refineries post-rehabilitation in 2023.
Determined to boost petroleum products supply and distribution in riverine areas of the Niger Delta, Mele Kyari’s NNPC signed an agreement with the Nigerian Content Development and Monitoring Board (NCDMB) and Zed Energy for the construction of the N10.5bn Brass Petroleum Products Terminal. The facility will serve as a strategic reserve for the country 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. It will close the infrastructure gap in the distribution of petroleum products and also help to stop illegal refining activities.
REFINERIES REHABILITATIONS
The GMD’s aspiration is to ensure that the nation’s four refineries at Port Harcourt, Warri and Kaduna were fully revitalized by 2022, to move Nigeria from a net importer of refined petroleum products to top exporter of the commodity come 2023.
Truelly, Kyari is walking the talk. Refineries rehabilitations are currently at top gear and some are now at advanced stages.
In fact, the GMD, on April 6, 2021, led the NNPC to sign the $1.5bn Engineering, Procurement & Construction (EPC) Contract Agreement with TecnimontSpA, for the complete rehabilitation of Port Harcourt Refinery. He led NNPC and the contractor, TecnimontS.p.A., to flag off construction work on the Port Harcourt Refinery rehabilitation project.
The NNPC boss also plans to put in place 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 who would ensure that they are regularly maintained as and when due.
WRPC and KRPC EPC contracting has progressed to advanced stage with a certificate of no objection secured from BPP on the award of the contract. The Corporation is currenrly awaiting FEC approval for the award to the most technically and commercially qualified globally reputable EPC company.
GAS DEVELOPMENT
Since he took over at the NNPC 24 months ago, Mele kolo Kyari has put in place strategies to exploit and utilise the nation’s natural gas reserves to translate the sector to a key revenue earner.
His priority is to unlock and harness the potential of Nigeria’s gas resources to increase domestic and industrial power supply, raise living standards and support sustainable economic growth.
This is in line with President Muhammadu Buhari administration’s target to ensure adequate gas supply to the power sector, stimulate gas-based industrialisation by positioning Nigeria as African’s regional hub for gas-based industries such as fertilizer; petrochemicals; methanol and gas export to high value and strategic foreign markets.
A key milestone in the area of gas was the signing of the long awaited Final Investment Decision (FID) on NLNG Train 7 Project in December 2019.
The project was in the pipeline for over a decade. It 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.
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.
Following the successful tiding up of preliminary works, the stakeholder of the company decided to carry out the ground breaking of NLNG train 7 project on 15th June, 2021. Thus signaling the commencement of construction work on the project.
AKK PIPELINE PROJECT
Under Kyari’s watch, the NNPC on June 30, 2020 successfully flagged-off the construction of the Ajaokuta-Kaduna-Kano (AKK) gas pipeline project.
The AKK pipeline project which has been described by President Muhammadu Buhari 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 per day.
The infrastructure designed to feed gas into the AKK – the Escravos Lagos Pipeline System II (ELPS II) and Oben-Obiafu-Obrikom (OB3) gas pipeline are also being aggressively executed and expanded to increase delivery capacity from 1.5BCF/D to over 3.5BCF/D. The ELPS II has reached 96.34 per cent completion.
Through Kyari’s doggedness and the share desire to ensure Nigeria gets the highest value, he ensure that the Corporation to achieve a $300million reduction in the cost of the AKK Gas Pipeline contract via contract renegotiation from the initial $2.8billion.
In additional to the major strides in the gas sector, the sector also witnessed in late 2020 the commissioning of the Oredo Integrated Gas Handling Facility (IGHF) and the Liquefied Petroleum Gas Storage and Dispensing Unit. The facilities are wholly owned and constructed by the Nigerian Petroleum Development Company (NPDC) to address domestic gas supply challenges. The facilities currently deliver over 200 million standard cubic feet of dry gas per day and 330 metric tonnes of Liquefied Petroleum Gas (cooking gas) which is equivalent of 16 units of 20tonnes LPG trucks per day into the domestic market.
To provide an alternative to Premium Motor Spirit AKA petrol as the sole automotive fuel and reduce the huge importation bill of the product, the GMD led NNPC to key into the Year /Decade of Gas initiative spearheaded by the Minister of State for Petroleum Resources, Timipre Sylva to launch the Autogas initiative. It executed a JV agreement with NIPCO to help in the marketing and distribution of the product to get as many Nigerians as possible to migrate to the use of gas as automotive fuel.
GAS DEAL WITH SEEPCO
As part of efforts to promote gas production and utilization in the domestic market, the NNPC recently signed an agreement with Sterling Exploration and Energy Production Company (SEEPCO) for the development and commercialization of gas from the Oil Mining Lease (OML) 143 that could help reduce gas flaring in the country.
The execution of the gas deal with SEEPCO on April 22, 2021, was a testament to NNPC’s commitment to facilitating the nation’s transformation into a gas-powered economy.
The project will boost the nation’s gas production by 1.2trillion cubic feet (tcf).
BRASS GAS HUB
The NNPC has also taken a significant step towards bringing the proposed Brass Gas Hub into reality. To this end, the GMD led the NNPC to take the Final Investment Decision (FID) with the Brass Fertilizer and Petrochemical Company for the $3.6bn Brass Methanol Plant in Odioma, Bayelsa State.
As part of concerted efforts to ramp up gas-to-industries and gas-to-power in the country, the NNPC, under Kyari last year, signed a $260m financing agreement for the Assa-North Ohaji South (ANOH) Gas Project with Seplat Petroleum. The project will deliver 300 million standard cubic feet of gas per day and 1,200 megawatts of electricity to the domestic market.
It is expected that the project will produce about 300million standard cubic feet of gas per day, an equivalent of approximately 1.2megawatts of electricity for the domestic market.
Also, the Corporation has secured the United State Trade and Development Agency (USTDA) Grant and commenced the upgrade of 1350MW Abuja IPP project development to World Bank Standard for bankability.