NNPCL: Two Years of Delivering Value to Nigerians as a Company

Ifeanyi Onuba

On Friday, July 19 this year, the Nigerian National Petroleum Company Limited (NNPCL) became two years of its transformation into a company whose operations is being regulated under the Companies and Allied Matters Act.

The NNPCL’s transformation into a CAMA company followed the implementation of the Petroleum Industry Act 2021. The signing of the Petroleum Industry Act (PIA) in August 2021 by former President Muhammadu Buhari was a game changer for the NNPC Ltd and the management team led by the Group Chief Executive Officer, Mallam Mele Kyari as it opened the door for more significant changes in the national oil giant.

With the unveiling of the entity in 2022 as a Company and Allied Matters Act (CAMA) firm, as encapsulated in the Petroleum Industry Act (PIA), the ground was set for a reformed national oil firm that was ready to compete with its peers globally.

Before the passage of the PIA, many had admitted that the old NNPC, had experienced an unenviable past because of the seeming loss of faith in its operations. But that perception has changed since the commencement of the implementation of the PIA under the leadership of the GCEO.

Indeed, under the current management, the 44-year-old NNPC joined the global Extractive Industries Transparency Initiative (EITI). It also declared its first profit in about four and a half decades, released its Annual Financial Report to the public and has generally been more open to public scrutiny.

The NNPCL also moved from a loss-making company to a profitable one in 2020 when, for the first time in its 44 years history, it declared a profit after tax of N287bn. This went up to N674bn in 2021, before hitting N2.52tn in the 2022 financial period.

With the company now fully transitioned into a commercial entity, stakeholders say things are even about to get better as the Nigerian energy sector has seen significant progress since the implementation of the Petroleum Industry Act in 2021.

It is noteworthy that Kyari had worked tirelessly to ensure the passage of the PIA, an initiative which is aimed at overhauling the country’s energy laws and creating a deregulated environment, freeing the oil sector from government control and unbundling the oil company.

The passage of the PIA gave birth to a rejuvenated NNPCL in 2022, which empowered the company to operate like every private company in Nigeria with exemption from the Fiscal Responsibility Act, Public Procurement Act and Treasury Single Account in order to ensure there are no excuses for failure.

With the registration by the Corporate Affairs Commission, the NNPCL was floated with an initial capital of N200bn making history as the company with the highest share capital in the country.

Between when the PIA was signed into law in August 2021 and now, the management of the NNPC had taken proactive steps to reposition its operations.

For instance, several engagements took place between the NNPCL, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, the Nigerian Upstream Petroleum Regulatory Commission, the Ministry of Petroleum Resources, the Ministry of Finance, Governors, legislators, host communities and other key stakeholders to understand the impact of the changes the PIA brings.

Following this milestone, Kyari, initiated new investment benchmarks to further rejuvenate the once ineffective company. Two months after becoming a CAMA company, the NNPCL in September 2022 sealed  the acquisition of OVH making it to add to its assets reception jetty (ASPM) with 240,000MT monthly capacity, eight LPG Plants, three  Lubes Blending Plants, three Aviation Depots, and 12 warehouses.

Also, Oando’s 380 fuelling stations was added to NNPCL’s existing stations making it the largest in Africa. Through the deal, NNPCL leveraged on Oando’s coverage across Africa to become a leading energy company.

The acquisition, under the leadership of the GCEO of the NNPCL, showed his vision to make the company a force in the global energy market. Apart from this deal, the NNPCL under Kyari in June last year sealed another deal with four National Oil Companies on the $25bn Nigeria-Morocco Gas Pipeline Project

These tripartite MoUs were respectively and successively signed between the Nigerian National Petroleum Company Limited (NNPC) and the Office National des Hydrocarbures et des Mines (ONHYM) of Morocco on one hand, and the Société Nationale des Opérations Pétrolières of Cote d’Ivoire (PETROCI), the National Oil Company of Liberia (NOCAL), the Société Nationale des Hydrocarbures of Benin (SNH-Benin), and the Société Nationale des Pétroles of the Republic of Guinea (SONAP) on the other hand.

The Nigeria-Morocco Gas Pipeline (NMGP) Project is an initiative of the Federal Government of Nigeria and the Kingdom of Morocco and was conceived during the visit of King Mohammed VI of Morocco to Nigeria in December 2016.

The Pipeline Cooperation Agreement for the project was executed in 2017.

The pipeline length of the project is 5,300 kilometers from Nigeria-Dakhla (Morocco) and 1,700 kilometers (onshore) from Dakhla (Morocco)-Northern Morocco.

The pipeline capacity for the project is 30BCM per year which is equivalent to 3.0 BSCFD 

Already, MoUs have been executed for the project with ECOWAS, SMH of Mauritania and Petrosen of Senegal.

Through the doggedness of Kyari, he ensured that the deal was consummated as the project is aimed at monetizing Nigeria’s abundant natural gas resources, thereby generating additional revenue for the Country, diversification of Nigeria’s gas export routes, and elimination of gas flaring.

The project will also assist in supplying gas to Morocco, 13 ECOWAS Countries and Europe, integration of the economies of the Sub-region, improvement of living standards of people within the Sub-region, creation of wealth and poverty alleviation, assisting in the fight against the desertification through sustainable and reliable gas supply as well as providing avenue for other Countries along the pipeline route to develop and export their gas.

Once completed, the project will enhance the monetization of the natural gas resources of the affected African countries and also offer a new alternative export route to Europe.

The pact marks another important milestone in the quest to tackle the energy poverty that has been limiting the potential of the African continent to boost industrialisation.

As a commercial enterprise, the NNPCL under Kyari sees this project as an opportunity to monetise Nigeria’s abundant hydrocarbon resources, by expanding access to energy to support economic growth, industrialization, and job creation across the African continent and beyond.

The footprints of Kyari  in the oil and gas sector was also felt in 2023  as the NNPC Ltd secured $7bn fresh investments from India for Nigeria’s petrochemical industry. Kyari had accompanied President Bola Tinubu to India were the deal was announced

Tinubu had departed Abuja, Nigeria’s capital, for the G20 summit which was held from September 9 to 10, 2023 in New Delhi, the Indian capital. The President’s visit to India was focused on attracting investments to Nigeria with lucrative opportunities for investors, but most importantly, jobs for Nigerians and new revenue opportunities for the country.

India is one of the growing markets for Nigeria’s Liquefied Natural Gas and through this deal, the government will be able to create job opportunities for Nigerians. Indian businesses serve as significant investments source in the midstream, downstream and upstream sectors of the oil and gas industry.

In the area of gas infrastructure, since the announcement of the fuel subsidy removal in 2023, the NNPCL has doubled its efforts to drive energy security by utilizing Nigeria’s abundant gas resources. The company has delivered numerous gas projects that would drive CNG gas penetration across the country. 

Last year, the NNPCL entered a partnership with NIPCO to set up 35 compressed natural gas (CNG) stations in Lagos and other parts of the country. During the partnership, Kyari had said the partnership is “Part of the NNPCL commitment to reducing carbon footprint and providing cheaper alternative fuel to motorists.”

On May 19, 2024, the NNPCL and partners also delivered three critical gas infrastructures commissioned by the President. The projects were, the AHL Gas Processing Plant 2 (GPP – 2) – 200mmscf/d which is an expansion to the Kwale Gas Processing Plant (GPP – 1); the AHL Gas Plant, which is being developed by AHL Limited, an incorporated Joint Venture owned by NNPC Limited and SEEPCO and the ANOH-OB3 CTMS Gas Pipeline Project.

In furtherance of the efforts to drive increased gas utilisation in the country, the federal government also commissioned the 5.2 MMSCFD Compressed Natural Gas/Autogas Facility at Ilasamaja, Lagos, built through a partnership between the NNPC Limited and Transit Gas Nigeria Limited (TGNL).

Under the theme: “From Gas to Prosperity; CNG For All”, the NNPC CNG Station is a 5.2MMscf per day capacity station that can serve vehicles and also supply gas to industries and other companies.

 The station is strategically located and it is expected to meet the fuelling needs of motorists, in line with the federal government’s goal of nationwide adoption of CNG as the fuel of choice for transportation.

The facility is 100 per cent energy sufficient due to the natural gas advantage and does not depend on the national grid for power. It will serve thousands of Natural Gas-powered vehicles in Lagos and its surroundings; while promoting a stable, cleaner energy for domestic utilization. It will also contribute significantly to annual carbon-dioxide emissions savings and support environmental sustainability.

Also, in June this year, in a major step towards boosting Nigeria’s oil and gas production, the NNPC-TotalEnergies Joint Venture officially announced a $550m Final Investment Decision (FID) on the Ubeta Field Development Project.

This milestone is in line with President Tinubu’s Presidential Executive Order on Oil and Gas Reforms aimed largely at improving the investment climate and positioning Nigeria as the preferred investment destination for the oil and gas sector in Africa.

The three Executive Orders, which became effective 28th February 2024, are the Oil and Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order, 2024; Presidential Directive on Local Content Compliance Requirements, 2024; and Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines, 2024.

Nigeria is endowed with large oil and gas resources and under Kyari’s transformative leadership, the NNPCL had conceived the idea of monetising Nigeria’s huge gas resources through various gas projects.

For a man who has transformed the NNPCL within the last four years despite the mounting opposition to some of his reforms initiatives, it is gratifying to know that the President believes in Kyari’s capacity to implement energy policies that will enable the federal government to monetize all available oil and gas resources of today while paving the way for the total exploitation of new and cleaner energy sources of tomorrow.

Since the issuance of the Presidential Executive Orders, the NNPCL has redoubled its efforts to drive energy security by utilising Nigeria’s abundant gas resources.

Under Kyari’s leadership, the NNPCL has invested heavily in domestic gas footprint expansion projects through the delivery of the trans-Nigerian gas pipeline projects which includes the escravos project, the Lagos pipelines system,  and the Ajaokuta-Kano Gas Pipelines. 

As a national oil company, the NNPCL is cooperating with its partners to solve the energy challenges facing the country.

With Nigeria boasting substantial gas reserves exceeding 200 trillion cubic feet (Tcf) and a potential to reach 600 Tcf, it is pertinent Nigeria leverages the gas resource for sustainable development, energy security, and job creation.

With the massive investments being recorded in the oil and gas sector under the dynamic and focussed leadership of Kyari, the NNPCL is making significant progress in achieving its mandate 

Over these two years, the company has made significant advancements in its operations, innovation, and commitment to sustainability.

As it look to the future, the NNPCL has shown that it remain dedicated to delivering value, driving excellence, and contributing to the prosperity of Nigeria and beyond.

Onuba writes from Lagos.