Improved transparency, gas development… how Kyari-led NNPC fared in two years

On July 8, 2019, Mele Kyari officially took over as the 19th group managing director (GMD) of the Nigerian National Petroleum Corporation (NNPC).

On assumption of office, the trained geologist promised to breathe new life into the national oil company.

An assessment of the NNPC’s scorecard obtained by TheCable gives a clear picture of Kyari’s achievements in two years.

TRANSPARENCY 

At his inauguration, Kyari emphasised that transparency and accountability would be the cardinal pillars of his management. 

He promptly followed up his inaugural pronouncement with the launch of his management’s strategic objectives two weeks later. He christened it as Transparency, Accountability and Performance Excellence (TAPE).

Since then, he has walked the transparency and accountability talk by opening up the corporation’s books the way no other management before him has done. The key accomplishments in this regard include:

1. The publication of the 2018 and 2019 audited financial statements 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 on the corporation’s website for all interested parties to access and scrutinize.

2. A major revelation in the audited financial statements of the two years so far published is 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.

3. The Kyari-led management also sustained the corporation’s Monthly Financial & Operations Reports (MFOR) in line with the TAPE vision. NNPC remains the only national oil company that publishes its financial and operations reports monthly globally.

4. The GMD also led the corporation to enlist with the Global Extractive Industry Transparency Initiative (EITI) as an EITI supporting company which places NNPC in the group of over 65 extractive companies, state-owned enterprises committed to observing transparency and accountability standards defined by EITI.

5. Another key achievement of the NNPC under the leadership of Mallam Kyari on the transparency terrain is the successful completion of a controversy-free recruitment exercise for 1,000 young graduate trainees to rejuvenate the corporation’s talent mix.

REFINERY REHABILITATION 

Another goal that the GMD set for his management at the inauguration in 2019 was the refineries’ rehabilitation. Kyari has made good on that promise by driving the rehabilitation project to an advanced level.

On April 6, 2021, he led the NNPC to sign the $1.5 billion engineering, procurement & construction (EPC) contract agreement with Tecnimont SpA to complete Port Harcourt refinery rehabilitation.

On May 6, 2021, the GMD led NNPC and the contractor, Tecnimont S.p.A, to flag off construction work on the Port Harcourt refinery rehabilitation project.

He is in the process of making good his promise to introduce a new operational model for the refineries post-rehabilitation with the call for bids for the operations & maintenance (O&M) contract for the refineries advertised recently in the media.

The O&M model would ensure that the refineries are managed by contractors with the requisite experience and ensure that they are regularly maintained as and when due.

Warri Refining and Petrochemical Company (WRPC) and Kaduna Refining and Petrochemical Company (KRPC) EPC contracting has progressed to an advanced stage with a certificate of no objection secured from BPP on the award of the contract. The contract is awaiting FEC approval of award to the most technically and commercially qualified globally reputable EPC company.

GAS DEVELOPMENT 

Kyari worked with other stakeholders to take the final investment decision (FID) on the Nigerian Liquefied Natural Gas (NLNG) Train 7 project in December 2019. The investment deal had been on the drawing board for over ten years.

The EPC contract of the NLNG Train 7 project was awarded in May 2020 to the SCD JV consortium comprising affiliates of Saipem, Chiyoda and Daewoo.

The project is expected to generate over $20 billion of revenue to the government over the project’s lifecycle and create 10,000 direct and 40,000 indirect jobs.

On completion, it would raise the NLNG production capacity by 35 per cent from the current 22 million tonnes per annum (MTPA) to 30 MTPA.

The NNPC, on June 30, 2020, also successfully flagged off the construction of the Ajaokuta-Kaduna-Kano (AKK) gas pipeline project, which is an integral part of the Trans-Nigeria Gas Pipeline, TNGP, with a capacity to transport about 2.2 billion cubic feet of gas per day.

Kyari’s administration also led the NNPC to achieve a $300 million reduction in the AKK gas pipeline contract cost via contract renegotiation from the initial $2.8 billion.

An additional major stride in the gas sector was witnessed in late 2020, with 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 NPDC to address domestic gas supply challenges.

To provide an alternative to petrol, he led NNPC to key into the Year/Decade of Gas initiative, spearheaded by Timipre Sylva, the minister of state for petroleum resources, to launch the autogas initiative.

Specifically, 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 gas as automotive fuel.

Kyari led NNPC to take the final investment decision (FID) with the Brass Fertiliser and Petrochemical Company for the $3.6 billion brass methanol plant in Odioma, Bayelsa state. The decision was followed by signing a $260 million financing agreement for the Assa-North Ohaji South gas projects with Seplat and expected to deliver 300 million standard cubic feet of gas per day and 1,200 megawatts of electricity to the domestic market.

On April 22, 2021, NNPC executed a gas development agreement (GDA) for the oil mining license (OML) 143 with its partner, Sterling Oil Exploration and Production Company (SEEPCO) expected to boost the nation’s gas production by 1.2 trillion cubic feet, tcf.

UPSTREAM SECTOR 

To boost the nation’s crude oil reserves to 40 billion barrels, the GMD galvanized NNPC to rev up exploration work in the inland basins. The drilling of the Kolmani River II well culminating in oil find in commercial quantity in the Upper Benue Trough.

The drilling of the Kolmani River III well is ongoing with a high prospect of the oil find. Seismic data collection is also ongoing in the Bida and Sokoto basins, while plans are underway to re-launch the exploration work in the Chad Basin.

In terms of oil production, he helped resolve the dispute involving Shell and Belema Oil, which had scuttled the output of over 30,000 barrels per day in OML 25.

He 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 (PSCs). It paved the way for the renewal of OML 125 and further investment in the exploration of the field to enhance the nation’s crude oil production.

In May 2021, Kyari led the corporation to sign agreements with SNEPCO and other PSC partners to resolve disputes around OML 118. This move led to the renewal of acreage, with the prospect of a new $10 billion investment in the development of the Bonga South-East Field.

DOWNSTREAM SECTOR 

In the downstream sector, Kyari introduced ‘Operation White’, which has helped in streamlining petroleum products importation, supply and distribution across the country.

The NNPC is strengthening the products distribution system by revamping the pipeline network through a Build, Operate and Transfer, BOT model, with processes already at an advanced stage.

During his watch, NNPC signed an agreement with the Nigerian Content Development and Monitoring Board (NCDMB) and Zed Energy to construct the N10.5 billion brass petroleum products terminal in the Niger Delta.

STAKEHOLDERS ENGAGEMENT

At his inauguration, Kyari also promised to upscale engagement with stakeholders to ensure that stakeholders are carried along in the corporation’s operations.

He has kept faith with this pledge by devoting time to honour invitations from the relevant committees of the national assembly, holding periodic engagement sessions with critical stakeholders, including the media.

COVID -19 INTERVENTIONS

Following the outbreak of the COVID-19 last year, Kyari rallied players in the oil and gas industry to raise over N21 billion to support the fight against the spread of the virus in Nigeria.