The Nigerian National Petroleum Company (NNPC) Limited has every reason to perform beyond expectation in 2022 as President Muhammadu Buhari on Friday inaugurated the Board of the newly incorporated NNPC.
The inauguration which took place in Abuja was to ensure strict compliance with Corporate Governance principles that place premium on doing business with the highest ethical standards, integrity, and transparency.
Inaugurating the Board chaired by Sen. Margaret Chuba Okadigbo, the President charged them to focus on profitability and operate at par with its industry peers across the world.
“I expect the NNPC Limited to be mindful of our commitments to our net carbon zero aspirations and to ensure total alignment with the global energy transition realities,” he said.
The President reminded the Board members that they came on board as a result of the reforms put forward by the Petroleum Industry Act (PIA) 2021, which seeks to reposition the Nigerian petroleum industry to a commercially viable and competitive industry in line with global business dynamics and best practices.
“The Nigerian National Petroleum Company Limited is mandated to focus on profitability and continuous value creation beyond the simple fulfilment of legal and regulatory requirements.
“NNPC Limited is expected to operate at par with its industry peers across the world, while acting as Enabler Company that will foster the development of other sectors of our Economy.
“The inauguration of this Board is a major step in the ongoing transition to a more viable petroleum industry that will attract investment to support our economic growth and generate employment to millions of our people,” he said.
President Buhari directed that there should be full alignment and synergy between NNPC Limited, the Upstream Regulatory Commission and the Midstream and the Downstream Regulatory Authority in compliance with the provisions of the law in all respects to deliver the onerous reforms envisaged for the energy industry.
“NNPC Limited is expected to operate at par with its industry peers elsewhere in the world, while acting as Enabler Company that will foster the development of other sectors of our Economy.”
While thanking the leadership and members of the National Assembly for their seamless support in the journey towards a viable, accountable and transparent energy industry, the President said he would count on the professional insights and ethical conduct of the Board members to ensure the delivery of his administration’s promises to Nigerians.
In his remarks, the Minister of State, Petroleum Resources, Timipre Sylva said under the present administration a lot had been achieved in the petroleum industry, including the signing of the PIA, the registration of NNPC Limited as a CAMA company and the inauguration of the Board of the NNPC Limited.
“Mr President this is history in the making because this is the first time any President of the Federal Republic of Nigeria is inaugurating an independent board of an independent NNPC Limited.
“This, however, puts a lot of responsibility on the shoulders of those inaugurated and those of us in the Ministry of Petroleum Resources,” he said.
The following persons were inaugurated: Sen. Okadigbo, Chairman, Mele Kolo Kyari, CEO and Umar I. Ajiya, as the Chief Financial Officer.
Members of the board are, Dr Tajudeen Umar (North East), Mrs Lami O. Ahmed (North Central), Malam Mohammed Lawal (North West), Engr. Henry Obih (South East), and Barrister Constance Harry Marshal (South South).
Others are Chief Pius Akinyelure (South West), Dr Nasir Sani Gwarzo, Permanent Secretary, Ministry of Petroleum Resources and Aliyu Ahmed, Permanent Secretary, Ministry of Finance, Budget and National Planning.
In retrospect, the Nigerian National Petroleum Company (NNPC) Limited recorded some remarkable achievements in 2021 including the signing into law of the Petroleum Industry Act (PIA) by President Muhammadu Buhari.
There are other major achievements in the industry which had placed the country on the part of success since the first discovery of crude oil in 1956 at Oloibiri, in present day Bayelsa.
The oil and gas industry had since grown to become the bane bedrock of Nigerian economic and a major source of national development.
The industry contributes about 30 per cent of the nation’s gross domestic product, GDP, over 70 per cent of government revenue and 90 per cent of foreign exchange earnings.
With this steady beat over the past six decades and the attendant contribution to the national coffers, the Nigerian oil and gas industry has evolved; with Nigeria becoming the largest oil and gas producer in Africa.
According to the defunct Department of Petroleum Resources (DPR), Nigeria has a total of 159 oil fields and 1,481 operating wells.
Nigeria currently has the largest gas reserve in the African continent and the world’s fifth-largest exporter of liquefied natural (LNG).
According to the defunct DPR, Nigeria has a proven gas deposit of 206.53 trillion cubic feet; the gas reserve is projected to increase to 230 trillion cubic feet by 2030.
The new figure represented a major increase of 3.37TCF in proven natural gas reserves; a 1.66 per cent rise from the 203.16TCF recorded on Jan. 1, 2020.
Sarki Auwalu, who was Director of DPR, in a breakdown, said of the 206.53TCF, Associated Gas was 100.73TCF and Non Associated Gas 105.80TCF.
The impact of the unexpected emergence of the COVID-19 pandemic on the global oil and gas industry in 2020 brought huge losses to the industry; consequently, in the last two years, the global oil and gas industry suffered a two-pronged setbacks caused by the imbalance in oil supply/demand and price deflation.
This global issue of course did not happen without a reverberating effect on the Nigerian oil and gas industry and that has not put the nation’s economy in a good stead.
In January, Chief Timipre Sylva, Minister of State for Petroleum Resources, declared 2021 to 2030 as the Decade of Gas Development.
Sylva said the initiative was to transform Nigeria to a gas-powered economy by 2030.
“Our efforts will continue to focus on gas to transmute Nigeria from the conventional dependence on white products to a cleaner, more available, accessible, acceptable, and affordable energy use in gas.
“This will not only cushion the effects of current deregulation but also create enormous job opportunities for Nigerians”.
On Jan. 21, President Muhammadu Buhari inaugurated the National Oil and Gas Excellence Centre (NOGEC) with the main objective of strengthening Nigeria’s position as regional leader in the oil and gas industry.
The NOGEC flagship centres are: Search, Rescue and Surveillance (SeRAS) Command and Control Centre and National Improved Oil Recovery Centre (NIORC).
Others are Oil and Gas Dispute Resolution Centre (DRC), Oil and Gas Competence Development Centre (CDC) and Integrated Data Mining and Analytics Centre (IDMAC).
The centre will drive the three-pronged objectives of safety, value and cost efficiency which are critical activities for oil and gas industry stability, growth and sustainability.
In February, the Federal Government issued License to Establish (LTE) to UTM Offshore for the development of Nigeria’s first Floating Liquefied Natural Gas (FLNG) project.
The multi-billion-dollar plant, when operational, is projected to process 176mmcfd natural gas and condensate that will give the nation’s economy a boost.
In April, the NNPC signed an Engineering, Procurement, Construction, Installation and Commissioning (EPCIC) contract for the rehabilitation of the 210,000 barrels per day capacity Port Harcourt Refinery in Alesa-Eleme, Rivers State.
The rehabilitation project has a completion timeline spanning 18 and 44 months under a three-phase arrangement.
It was awarded to Milan-based Tecnimont SpA at a lump sum contract price of 1.5 billion dollars, inclusive of VAT and other statutory payments.
NNPC GMD, Malam Mele Kyari, said that the PHRC rehabilitation project was in line with President Buhari’s promise to the Nigerian people to make the refineries work.
In May, the Federal Government announced that it has concluded the bidding for 57 marginal oilfields which began on June 1, 2020.
No fewer than 161 companies were allocated marginal fields, with the Federal Government raking in about 500 million dollars as signature bonuses from the successful companies.
The Minister of State for Petroleum Resources, Timipre Sylva said that the bid round was aimed at enhancing the participation of indigenous companies in the upstream segment of the industry.
According to him, it will also provide opportunities for technical and financial partnership opportunities for investors.
The minister said some of the indigenous companies derived from previous marginal oilfield bid rounds were now competing with International Oil Companies.
In August, the Federal Executive Council (FEC) granted the NNPC approval to acquire a 20 per cent minority stake in the Dangote Petroleum and Petro-Chemical Refinery under construction.
The Minister of State for Petroleum Resources said that the acquisition is at the total sum of 2.76 billion dollars.
He noted that NNPC Limited is also planning to acquire stakes in other private refineries that are being established in the country.
Providing clarification on this venture, the GMD NNPC Kyari said that as a National Oil Company, NNPC primarily has a dual role of providing stewardship for the nation’s hydrocarbon resources and adding value to the resources through viable business ventures for the benefit of all Nigerians and other stakeholders.
According to him, these roles enable NNPC Limited to achieve the twin objectives of providing energy security for the country and stimulating the nation’s economic development and growth.
Also in August 2021, the Federal Executive Council (FEC) approved the award of contract for the rehabilitation of Warri and Kaduna Refineries at the combined total sum of 1.5 billion dollars.
The Warri Refinery contract was at the sum of 897. 67 million dollars and 586. 9 million dollars was for Kaduna Refinery.
Sylva said that the rehabilitation contract awarded to Messers Saipem SPA and Saipem Contracting Limited at a total of 1.48 billion dollars would be carried out in three phases, over a period of 77 months.
One of the most significant events in the history of the Nigerian oil and gas industry occurred On Aug. 16, 2021 when President Buhari signed the PIA following the passage of the Petroleum Industry Bill by the National Assembly in July.
The landmark PIA is expected to unleash the transformation of the oil and gas sector in Nigeria by enabling investments and codifying the regulatory, administrative and fiscal framework for the industry.
Professor Uche Uwaleke, a Professor of Capital Market at the Nassarawa State University, Keffi described the PIA as a major game changer in the Nigerian oil and gas industry.
On Aug. 26, President Muhammadu Buhari who is also the Minister of Petroleum Resources announced that the NNPC had declared a Profit After Tax of N287 billion for the year 2020.
He noted that the net profit was the first in the 44-year history of the establishment.
Industry stakeholders commended the NNPC management, saying that that level of transparency and accountability that will be entrenched by the PIA would propel investors to commit their funds into Nigerian oil and gas business.
The Minister of State for Petroleum Resources, Sylva in a virtual message expressed gratitude to the Management and staff of NNPC on the historic achievement
Mallam Mele Kyari, GMD/CEO, NNPC Ltd., said the NNPC would continue to deliver dividends to its shareholders going forward, especially with the passage of the PIA.
The signing of the PIA led to the scrapping of DPR, Petroleum Equalisation Fund Management Board (PEFMB), and Petroleum Product Pricing Regulatory Agency (PPPRA).
They were replaced by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
Mr Gbenga Komolafe was named as the Chief Executive Officer (CEO) of the NUPRC, while Mr Farouk Ahmed was appointed as the CEO of the NMDPRA, in October.
The NUPRC is in charge of upstream petroleum regulatory activities while the NMDPRA is responsible for oil and gas activities in the midstream and downstream sectors.
NNPC Ltd. was incorporated as a Companies and Allied Matters Act (CAMA) company on September 22 in line with provisions of the PIA.
The NNPC Limited and its subsidiaries would operate under CAMA 2020 without recourse to Government funds, declare dividends to its shareholders and retain 20 per cent of profits to grow its business.
The new company is to be the supplier of last resort for security reasons and all associated costs shall be for the account of the federation.
In October, the NNPC was given approval for the reconstruction of 21 federal roads across the six geopolitical zones of the country.
The approval was given at the FEC meeting presided over by Vice President Yemi Osinbajo at the Presidential Villa, Abuja.
Briefing State House correspondents at the end of the council meeting, the Minister of Works and Housing, Mr Babatunde Fashola said that the construction works on the 1804.6 Kilometers roads is a strategic intervention under the Federal Government Road Infrastructure and Refreshment Tax Credit Scheme.
He explained that the Executive Order 7 allows the private sector to deploy in advance the taxes they would pay for infrastructure development.
The year 2021 witnessed intensified calls for global transition to cleaner sources of energy and reduction in investment in fossil fuels exploration activities which saw the major International oil companies divesting from crude oil to gas and other renewable resources of energy.
Many of the companies have changed their names from oil companies to energy companies to reflect their current positions as they move to become carbon neutral by 2045.
It is to this end that the world leaders gathered at the United Nations Climate Change Conference (COP 26) in Glasgow, Scotland in November with discussions on energy transition dominating the conference.
President Buhari who addressed the conference demanded for energy justice for Nigeria and other developing countries with hydrocarbon resources.
He said there was need to exploit the available resources as a pathway to attain the net-zero carbon objectives by 2050.
The president noted that even though Africa accounted for only about three per cent of the global carbon emission, the continent still had the responsibility to join the world in combating climate change.
According to him, Nigeria has identified its abundant gas resources as its fuel for energy transition which informed the declaration of the 2021 to 2030 as the “Decade of Gas” by the government.
He also said that the enactment of the PIA would attract investment for the enhancement of gas utilisation. This is in alignment with the various incentives granted to investors.
In November, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, announced that government would remove subsidy on Premium Motor Spirit from 2022.
The minister said that government plans to replace it with a monthly N5,000 transport grant to about 40 million poor Nigerians.
Analysts believe that removal of subsidy would make the price of petroleum products in Nigeria, be at par with its African neighbours which would discourage smuggling.
He said that the 2022 deadline is realistic as the impact of the subsidy removal might be mitigated with the coming on stream of the 650,000bpd Dangote Refinery, Bua Group Refinery, Waltersmith Refinery and other modular refineries.
Nigerians also witnessed an unprecedented hike in the price of Liquefied Petroleum Gas (LPG), also known as cooking gas, in 2021.
The increment forced some low-income families to go back to the use of firewood and stove, which was a setback to the government’s aspirations to deepen gas utilisation in the country.
As at January, the price of cooking gas ranged from N4,500 to N5,000 depending on the location, but in a few days to the end of the year in December, the marketer sold the LPG for between N8,500 and 10,000.
Marketers attribute the hike to global supply challenges, high international prices, limited availability of foreign exchange and high exchange rates.
The GMD/CEO of NNPC, Kyari gave reasons for the increase and assured the nation of NNPC’s commitment to bring down the prices.
On Nov. 5, Well head 1 in Nembe, Bayelsa operated by AITEO Exploration and Production spilled its contents, causing serious damage to the environment.
The company, working with local and international experts, was able to stop the leakage on Dec. 8, while clean up and investigation into the incident was carried out.
Also, NNPC presented a symbolic tax credit cheque to the Minister of Works and Housing Mr Babatunde Fashola, in his office in Abuja.
At the event, the minister dispelled insinuations that the NNPC was taking over road construction from the ministry.