The Nigerian National Petroleum Corporation (NNPC) has affirmed its readiness for the transition in the downstream sector of the oil and gas industry as it has taken the early lead by restructuring and diversifying its assets portfolio, achieved cost reduction and return to the profitability trajectory and has progressed well with the Petroleum Industry Act (PIA) implementation by transiting to a CAMA company.
The Group Managing Director of NNPC, Mallam Mele Kyari who made this statement in keynote address at the opening session of 15th Oil Trading and Logistics (OTL) Africa Downstream Week 2021 in Lagos on Tuesday with the theme, “Downstream In Transition: Getting Set”, observed that the Nigeria’s Oil and Gas industry had been in transition prior to Petroleum Industry Bill (PIB) passage in response to the global energy transition and decarbonization initiatives.
Kyari who was represented at the event by Group Executive Director, Downstream, NNPC, Engr. Adeyemi Adetunji added that it would be difficult to discuss the transition in downstream sub-sector in isolation of the overall evolution that was happening in the industry.
According to him, “NNPC has diversified its portfolio over the years transiting to an energy company with new investments in gas, power and renewables. Key pipeline projects are ongoing to assure delivery of the gas to the demand nodes. The OB3 project which brings gas from East to West is nearing completion. The 614km Ajaokuta, Kaduna, Kano (AKK) project which was launched by Mr. President in June 2020 is progressing very well. These could add up to $40 billion to annual GDP and create additional six million jobs.
“The Corporation has progressed with the Refineries Rehabilitation Programme to further boost its participation in the Oil and Gas value chain by awarding the $1.5 billion Port Harcourt rehabilitation contract with the commitment to deliver on Warri and Kaduna Refineries. The rehabilitation of critical downstream infrastructure comprising of major pipelines, depots and terminals through the Build, Operate and Transfer (BOT) financing model is on course.
“The Federal Government (FGN) has declared 2021 – 2030 as decade of gas development in Nigeria. The National Gas Expansion Programme (NGEP) was established by the Government to achieve the Gas Flare Commercialization for monetization of flared gas through investment in processing and distribution infrastructure and to realize the LPG Expansion and Penetration (from 1 MTPA to 5 MTPA by 2023 and convert 60 million households). This will support the attainment of the UN Sustainable Development Goal (SDG) 7 through provision of available, affordable and accessible clean fuel.
“Cost curtailment measures have been emplaced by NNPC in the face of challenges posed by Covid-19 to achieve efficiency, enable government to raise funds and ensure reasonable return for investors. Contracts were renegotiated in line with NNPC’s Transparency, Accountability and Performance Excellence (TAPE) Agenda to ensure process optimization and business survival in the face of challenges. Accordingly, the Corporation has declared profit after tax (PAT) of N287 billion in 2020 for the first time in its 44-year history, reducing losses from N803 billion in 2018 to N1.7 billion in 2019.
“NNPC is diversifying her portfolio through acquisition of 20% equity valued at $2.6 billion in the 650,000 bopd Dangote Refinery located in the Lekki Free Zone. This will ensure national energy security and guarantee market for Nigeria’s 300,000 bopd. The Corporation is also exploring opportunities across new business frontiers like renewables. Research and technology will become more efficient and relevant in Nigeria, particularly with a focus on increasing oil production, growing domestic gas utilisation and hydrocarbon reserves to generate revenue for the nation. NNPC has established a full-fledged Research Technology & Innovation (RTI) Division to drive the development of creative ideas across the Corporation for sustainable value enhancement.”
The NNPC GMD concluded by saying that the transition in Nigeria’s Oil and Gas sector was being driven by the global decarbonization efforts to switch to renewables in response to environmental concerns.
He maintained that as investments in hydrocarbon continue to wean due to energy transition and geopolitics, the world economy now faces shortages, high energy prices, rising inflation and sluggish growth.
“We see continuous development in Autogas, EVs and renewables. The implementation of PIA will support this shift by creating new investment opportunities as the midstream and downstream sub-sectors move down the aisle of transition. But the question is: are we set? To us in NNPC, the answer is in the affirmative as the Corporation has taken the early lead by restructuring and diversifying its assets portfolio, achieved cost reduction and return to the profitability trajectory, and has progressed well with PIA implementation by transiting to a CAMA company.
“Other industry players need to join the moving train, seize the opportunities and remain innovative to be able to thrive as the industry transits. The post-PIA space is big, promising and would be rewarding”, he stated.
Earlier in his welcome address, the Chairman, OTL Africa Downstream Week 2021, Dr. Emeka Akabogu remarked that more than ever before, energy transition was in focus as the world tried to clean up its energy consumption habits and companies retool to remain relevant in the changing energy dynamics.
Akabogu queried, “How well have countries on the continent embraced these realities? Are they even the reality of the downstream energy value chain in Africa? Concurrently with issues of global energy transition, countries are also dealing with implementation of changes to legal regimes. In Nigeria for instance, the Petroleum Industry Act has come with a raft of changes, with activity across the industry largely in a flux. There’s also a great deal of uncertainty in the industry, with many questions begging for answers.
“It is in the context of all these that we are poised for this year’s event with the theme – Downstream in Transition: Getting Set. The sessions reflect the crucial issues which the industry must address, and seek to find a path to clarity, increased investment and confidence. Mergers and acquisitions are active in the fuel retail space which we will be considering, while safety and efficiency remain crucial to profitability in shipment of petroleum products, particularly in the Gulf of Guinea.
“OTL is normally reflective of the times. At this year’s hybrid event, we witness a gradual and cautious return of the industry to full activity. We are therefore thankful to those who have despite the odds, invested time and resources to participate in the event this year. We are particularly grateful to our sponsors and exhibitors who have ensured that we have an event. We know that it is in times like these that strength of the industry is made manifest. So we salute those organisations that have stood out boldly and are poised to lead downstream energy going forward.”
Photo: (L-R): Dr. Emeka Akabogu, Chairman, OTL Africa Downstream; Charles Atiomo, representing Dr. Samba Seye, Managing Director, Total Energies; Sir Billy Okoye, Group Executive Director, Ventures and Bussiness Development, Nigerian National Petroleum Corporation (NNPC); Engr. Adeyemi Adetunji, representing the Group Managing Director of NNPC, Mallam Mele Kyari and Engr. Anthony Ogbuigwe, Managing Director, Gas and Energy Resources Consulting Limited after a panel discussion at the ongoing OTL Africa Downstream Week holding in Lagos from 26th to 29th October, 2021.
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