The Nigerian National Petroleum Corporation ( NNPC) has secured about S3.15 billion as alternative funding facility for its subsidiary, the National Petroleum Development Company (NPDC) with Sterling Exploration and Energy Production Company limited as well as other partners of the corporation for the development of the NPDC’s OML13.
According to the Group Managing Director of NNPC, Mallam Mele Kyari, who spoke with the Nigerian Association of Energy Correspondents (NAEC), in an interactive session, recently at Abuja, the corporation also secured other number of alternative funding facilities for the NPDC and some other four Joint Ventures to facilitate the development of some assets of the corporation.
These other facilities include: the N875.75 million NPDC OML 65 Alternative Funding and Technical services package with CMES-OMS Petroleum Development Company.
Mallam Kyari, who informed that the OML13 First oil of about 7,900bpd was achieved from the project on 1st April, 2020, while production is expected to peak at 94,000bpd and 542mmscfd within four years, stated that this is in line with the corporation’s promise of boosting the nation’s exploration and production target of Four billion barrels reserve and a national output of Three million barrels per day.
He, further stated, that in line with the promise, that the NNPC has gone ahead to rev up exploration in the inland basins, culminating in the finding of oil in commercial quantity in the upper Benue trough, the drilling of Kolmina River 111 Well, which had high prospects of oil find, the acquisition of seismic data at the Bida Basin as well as the re-launch of exploration at the Chad Basin.
The NNPC,he added, has, also, been able to resolve disputes which had hampered exploration and production activities in the industry. One of these, he said, is the Shell and Belema Oil that shut in over 30,000 barrels par day of oil in to he OML 35 field.
Another, achievement of the NNPC in this regard, he informed, is the execution of Abo OML 125 Head of Terms leading to the resolution of issues around most of the deep offshore sharing contracts paving way for the renewal of OML125 and further exploration of the lucrative field.
He, however, observed that the Covid-19 pandemic and the subsequent OPEC-Plus agreement to cut production has impacted on the corporation’s plans and activities about production growth while positing, that much has been achieved in this regard as normalcy is being waited for to return for the corporation to unleash some of these projects.
“In the meantime, we are investing aggressively in gas to take advantage of the energy transition and get Nigeria ready for the future in the face of the dwindling fortunes of petroleum liquids.’
“You may be aware of the NLNG Train 7 and other gas infrastructure projects such as the Escravos-Lagos Pipeline System Phase 2, Obiafu-Obrikom-Oben (OB3) gas pipeline, Ajaokuta-Kaduna-Kano (AKK) gas Pipeline. While the Integrated Gas Handling Facility in Edo State is billed for commissioning soon.”
“All these projects are aimed at ensuring that Nigeria takes its rightful place in the emerging global energy order where natural gas is envisaged to play a pivotal role,” he said.
The GMD, while speaking on the downstream sub-sector of the oil and gas industry of the nation informed that the sector is also experiencing an upswing with the introduction of Operation White which has helped us in streamlining petroleum products importation, supply and distribution across the country.
He assured that the arrangement the corporation has in place to sustain fuel supply across the country is solid and that it is sure of maintaining zero fuel queues throughout the Christmas and New Year festive season into 2021
He said, “even though gasoline price is as high as N464/litre in Niger and more than double our N160/litre range in most west African countries (see attached), we would continue to ensure Nigerians benefit from lowest comparative prices in West Africa and beyond.”
“We are in the process of strengthening the products distribution system by revamping our 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 Project which we have promised to deliver by 2023. I am happy to announce that the funding challenge which had stalled the second phase of the rehabilitation of the Port Harcourt Refinery has been resolved. The contract for the second phase will soon be awarded and work will commence in Q1 of 2021.”
Mallam Mele Kyari, also revealed that the NNPC is, currently, supporting private sector investors who are running a number of refinery projects across the country to promote local refining with a view to attaining self-sufficiency in refining and transforming Nigeria into a net exporter of petroleum products.
“In a nutshell, that is the position of NNPC today. I wish to also clarify that there is no iota of truth in the allegations that NNPC failed to remit funds that should accrue to the Federation and that it illegally withdrew money from the NLNG Dividends Account. Such is just not possible under the TSA arrangement.”
“Ladies and Gentlemen, despite these achievements, the year 2020 has been a difficult year for the industry and the world economy. The industry fundamentals have changed, and a lot of companies are struggling to adapt to the new normal. But the earlier we adapt the better our chances of succeeding through this difficult time.”
“Companies including Automobiles, Airlines, Hospitality and Financial Institutions were constrained to rationalize workforce in line with their declining revenues, while to some businesses, it was just the end of the game,” he stressed.
The helmsman of the NNPC who noted that the impact on oil and gas operations is tremendous as crude oil price turned negative for the first time in history, with rigs disappearing from oil fields, informed that according to industry analysis carried in Q1, 2020, E&P Companies are at risk of losing about $1 trillion in revenue by the end of 2020.
He said tha with the new lockdown orders due to resurgence of COVID-19 in Europe and other industrial Nations, the estimated revenue shrinkage may likely grow above Rystad Energy estimates by the close of 2020.
“This financial impact and the resultant poor liquidity position is making funding of both existing and new projects more difficult as companies cut spending and defer projects.”
“As a National Oil Company, our natural response to situation like this is NOT to shut down operations owing to the linear relationship between the oil industry and our Nation’s economy. What therefore first come to mind is how to SURVIVE and sustain our operations.”
“In today’s COVID-19 defined market, sustaining operations and making progress means that all stakeholders must recognize the need to improve efficiency, reduce costs, eliminate wastages, entrench Accountability, act with Transparency and embrace technology and innovation to drive Performance and value realization across strategic investment portfolios,” he added.