When former President Muhammadu Buhari signed the Petroleum Industry Bill into law, it meant the unbundling of the Nigeria National Petroleum Corporation (NNPC). And from August 2021 till date, it is obvious that implementing the PIA has set an NNPC Limited on a new pedestal as it has not looked back in its bid to rank with the best globally.
The PIB
The Petroleum Industry Bill (PIB) was first presented to the National Assembly in 2008, during the leadership of President, Umar Yar’Adua, now late.
Initially, energy experts were confident that the bill when passed would be a game changer and turn around the fortunes of the oil and gas industry in the country.
In spite of the several setbacks encountered, industry players knew that it was a matter of time for things to begin to take shape, as European and American companies dominated the nation’s oil exploration-Shell Petroleum Development Corporation, Chevron, Total Energies and ExxonMobil being the front liners.
Also, attempts were made to incorporate companies from China, Saudi Arabia and India into the country’s oil exploration.
However, existing Nigerian laws would not allow the leasing of oil wells to prospective companies from abroad since most of the Oil Mining Leases (OMLs) were in the firm grip of the existing International Oil Companies (IOCs).
The firms had held the OMLs for many years before the bill was proposed, and to change the situation, an overhaul was needed in the country’s energy law. Interestingly, this development necessitated the introduction of the PIB.
Furthermore, the expectation of the proposed reform in the oil industry was that the sector would be free from government control in a deregulated environment and at the same time unbundle the Nigerian National Petroleum Company Limited (NNPCL).
PIA: Prayers answered
It was like prayers answered when the former administration of Muhammadu Buhari signed the bill into law in August 2021.
Forty eight hours after, Buhari approved a steering committee to oversee its implementation, stressing that the country lost an estimated $50 billion worth of investments in just 10 years.
Buhari was quoted as saying that the loss was created by the uncertainty due to non-passage of the PIB.
Sealing new deals
It was on this premise that Malam Mele Kyari, the Group Chief Executive Officer (GCEO), NNPCL, recently made moves to set new investment benchmark post Petroleum Industry Act (PIA) 2021.
The NNPCL had sealed multiple deals which accumulated to about $48.15 billion to rejuvenate the hitherto inept company.
Other key investment project slated for Final Investment Decisions (FID) by the NNPCL, include the $25 billion West African Gas Pipeline project (Nigeria-Morocco gas pipeline).
The company will stake $12.5 billion to secure a 50 per cent equity and the $2.8 billion Ajaokuta-Kaduna-Kano (AKK) gas pipeline project among others.
Also, in its quest to boost its financial base, the Nigerian government in June 2022 renewed talks with Algeria and Niger to kick-start the $13 billion (€12.8 billion) Trans-Saharan Gas Pipeline (TSGP).
Never too late
Thus, oil and gas experts were full of expectation that as the implementation of the PIA continues, things would turn around for good in the sector.
Associate Professor of Energy and Natural Resources, Olanrewaju Aladeitan, noted that what NNPCL was doing with the Trans-Sahara Gas Pipeline (TSGP) project was what Nigeria should have done in the 1970s, or thereabout.
He said that Nigeria would have been taking advantage of the vacuum created by the non-supply of oil to Europe by Russia and expanding its gas projects to penetrate the European market.
“If we had done that, by now we would be smiling to the bank because we would have utilised the opportunity of the market left by the withdrawal of Russia.
“So if we can achieve the same aim through the Trans-Sahara pipeline, it will be fine.
“We also have the West African Gas Pipeline, which passes through Benin Republic, Togo to Ghana, and that has also been in the works for some time.
“This is what has informed Nigeria looking at constructing these pipelines to Europe and the gas can flow from there,” he said.
NNPCL’s business model
The need for NNPCL to vigorously pursue its model of investments was also highlighted at the Nigeria International Energy Summit (NIES 2023).
Speaking during business leaders and regulatory dialogue session at the event, Group Managing Director of Techno Oil Limited, Mrs Nkechi Obi, called for significant investments and infrastructure to achieve global energy mix and sustainable energy.
The firm is an indigenous oil and gas company,
“There are about eight mitigants to achieving the global energy mix but the provision of infrastructure, reduction in biomass and fossil fuel were key to achieving success, especially in the downstream sector.
“Nigeria needs an enabling environment to drive investments to position itself strategically in view of the global trend to transit to cleaner energy.
“She said the passage of the Petroleum Industry Act (PIA 2021) was a big relief in pursuit of cleaner energy”, she said.
Obi’s call was not different from what the country is trying to achieve through the investments embarked upon by the NNPCL, as gas is expected to play a bigger role in the global energy mix and that Nigeria had enough of it to drive the industry.
‘Great opportunities’
Senior Legislative Aide to the former Senate President on Gas and Power Mr Olabode Sowunmi, said the industry, particularly the gas sector, offers Nigeria great opportunities for industrialisation.
Sowunmi advocated consistency in the Nigeria Gas Master Plan, especially on projects such as AKK, Trans-Saharan Gas Pipeline and West African Gas Pipeline.
He expressed satisfaction that some reforms have started in the industry in view of the implementation of the PIA 2021.
Besides the multiple investment stakes, the company under the leadership of Kyari, has also taken positive measures aimed at blocking the loopholes in crude oil leakages, theft and vandalism.
Energy experts say the step is expected to propel NNPCL into a global profit-making brand like other major oil giants across the globe.
In pursuit of this role, the company in the last 24 months engaged in exploring new business ventures, investment opportunities.
It has also taken measures that had seen the nation’s dismal crude production of less than a million barrels per day increase to over 1.6 million barrels per day in the last 12 months.
The company successfully signed and acquired a 20 per cent federal government stake in the Dangote 650,000-barrel-per-day oil refinery for $2.76 billion.
It also secured over $3 billion local and foreign investment interests in the Kolmani Integrated Development Project.
The Kolmani project houses a 120,000-barrels per day refinery, a 500-million standard cubic feet per day gas processing plant, a 300-megawatt capacity power plant, and a fertiliser plant of 2,500 tons per day.
Milestone achievement
Earlier in 2023, the NNPC Renewed Oil Production pact with its partners for 10 billion barrels aimed at putting an end to the protracted dispute between the state-owned company and the contractor parties in OMLs 128, 130, 132 and 133, as well as 138 PSCs.
The agreements are the Production Sharing Agreement, Dispute Settlement Agreements, Settlement Repayment Agreement, and Escrow Agreement.
According to the NNPC Limited, signing of the new PSCs is a key milestone achievement, which will ultimately unlock opportunities within the Nigeria upstream sector.
Only last Thursday, the NNPCL signed a Heads of Terms (HoT) agreement with UTM Offshore Limited for the construction of the nation’s first indigenous floating liquified natural gas (LNG) project with a $5.6 billion funding package from Afreximbank.
Speaking on the UTM deal, Mr Garba Deen Muhammad, Chief Corporate Communications Officer, NNPCL, in a statement said the agreement was a step towards bolstering Nigeria’s energy security and promoting the utilisation of its abundant gas resources.
Breaking the jinx
And indeed, the company seems to have broken the jinx as the company grew its profit after tax from N287 billion in 2020 to N674 billion in 2021.
It would be recalled that for the first time in the history, the company, last Thursday, July 20, 2023, commenced the payment of interim dividend and Petroleum Sharing Contracts (PSC) profit oil into the Federation Account Allocation Committee (FAAC) with the of N123 billion.
A breakdown of the amount showed that the National Oil Company paid N81 billion as monthly interim dividend and N42 billion as 40 per cent PSC profit oil, this is in addition to compliance on payment of royalties and taxes.
Sylva’s role
Commenting on the NNPC Limited’s performance, Mr Horatius Egua, spokesman of the immediate past Minister of State for Petroleum Resources, Chief Timipre Sylva, said Sylva’s effort in ensuring the passage of the PIA was instrumental to the new feats.
According to Egua all that NNPC Limited has achieved today would not have been possible if the Petroleum Industry Bill (PIB) was not passed into law.
Source: NAN
