Kyari Propels Nigeria Towards $1tn Economy as Strategic Projects Boost Oil Production By 60,000bpd

Ukpe Philip

The Group Chief Executive Officer of the Nigerian National Petroleum Company Ltd (NNPCL), Mele Kyari, is spearheading transformative initiatives in Nigeria’s energy sector which have bolstered the country’s drive towards a $1trillion economy by 2027.

Energy security is a cornerstone for economic powerhouses like the United States ($26.9tn), China ($17.7tn), Japan ($4.4tn), and Germany ($4.1tn). 

The United Nations Development Programme recently underscored this, stating, “Adequate global energy supplies, for the world as a whole as well as for individual countries, are essential for sustainable development, proper functioning of the economy, and human well-being,”

Nigeria’s journey towards this ambitious economic target has faced significant hurdles, with crude oil output plummeting to 900,000 barrels per day in late 2022 due to theft, pipeline vandalism, and inadequate metering. 

Kyari’s strategic response involved establishing a joint task force comprising the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the military, and local communities to combat the challenges.

This concerted effort has yielded impressive results. By July 2024, Nigeria’s oil production, including condensates, surged to 1.53 million barrels per day – a 70% increase that restored the country’s status as Africa’s leading oil producer. 

The resurgence enabled the delivery of 32 million barrels of crude oil to domestic refineries, including the soon-to-be-operational Dangote and Port Harcourt refineries as well as the Seplat-WPSOL Refinery, Warri Refinery and Waltersmith Refinery, among others

A breakdown of the data from the NUPRC shows nine refineries have benefitted from the 32,088,122 barrels of crude as Dangote alone enjoyed 29,047,098 barrels out of the total supply between January to June 2024.

The Warri Refinery received 949,670 barrels; NDPR-NDPR Refinery got 823,395 barrels of crude; the Port Harcourt Refinery received 471,123 barrels; Seplat-WPSOL Refinery was allocated 419,541 barrels while Waltersmith-WSPOL Refinery got 296,353 barrels. Other beneficiaries were Edo Refinery that got 58,504 barrels of crude and Du-port Refinery that was supplied 22,438 barrels of crude.

This is a giant step in ensuring sufficient energy to support the $1tn economy target of the monetary and fiscal authorities.

Kyari’s leadership has also facilitated crucial financial support for key projects. Notably, NNPCL’s intervention saved First E&P from financial distress, enabling the development of the Madu-Anyala fields, which now contribute 60,000 barrels per day to national production.

In a recent confession, the Founder and Chief Executive Officer of First E&P, Ademola Adeyemi-Bero, disclosed that the NNPCL rescued his company from financial abyss, to deliver the 60,000 bpd Madu-Anyala fields.

“When we finally put the development plan in place, we were looking for about $725m to develop Anyala and Madu fields,” Adeyemi-Bero said in an interview with Africa Oil+Gas Report.

The two fields are a pair of undeveloped discoveries in oil mining leases (OMLs) 83 & 85, which First E&P purchased from Chevron in 2015. OMLs 83 & 85 are located in shallow water, offshore central Niger Delta.

He disclosed, “At that time, you may have heard that we were talking to a multinational oilfield services company which was supposed to help with financials. We closed that deal but a few months after, the company stepped back and said they could not do it. Not because the project was not viable, but there was a change of policy at their head office. The company was supposed to finance the joint venture, our 40 per share, and NNPC’s 60 per cent share.

“They looked at our plan, and they liked the fact that we have done it up to the finance and when the multinational oilfield services company stepped back, we didn’t have the money and to raise money in financing was challenging at that time.

“So NNPC said ‘First E&P, we’ve looked at this plan, we believe in this; how much do you need to bring the first field on stream?’ We told them. And they said go ahead, we would fund it 100 per cent; they had never done that before.

“Even in terms of our deal with the multinational oilfield services company, they said ‘don’t take the contracting away; leave it with them because they can do the work for you.”

When fuel subsidies that deprived Nigeria of at least N400bn monthly were removed, fuel prices jumped from about N170 to nearly N700 as of August but Kyari in line with its mandate to ensure energy security for Nigerians based on the provisions of the Petroleum Industry Act, 2021 immediately began to establish partnerships for the development of CNG stations to provide Nigerians a very cheap fuel.

In response to the rising fuel costs following subsidy removal, Kyari championed the adoption of Compressed Natural Gas (CNG) as a cheaper, cleaner alternative to petrol. The Presidential CNG initiative, a partnership between NNPC and NIPCO Gas, aims to establish 35 CNG stations nationwide, with 12 already operational.

Prof. Olu Ajakaiye, Director of the African Centre for Share Development, noted the importance of energy security in achieving the $1tn economy goal. 

Ajakaiye told THE WHISTLER that increasing output, CNG projects and the AKK Pipeline projects among other projects, is vital in achieving a $1tn goal. He explained that no economy can grow to that extent without considering energy security.

He said, “If there is going to be growth to $1trillion, it must happen in 49 sectors and these sectors have direct or indirect need for cheap energy. Attempts to increase output from N1.2-1.3 million barrels to near the OPEC quota will be a major initiative because it will give more revenue to government and foreign exchange which can then be used to finance the import requirements of all sectors from agriculture to education.

“Oil production and the management of the consequential inflow is a major step to achieving a $1tn economy. To get to $1trillion, we must double the size of the GDP and that requires a massive growth rate between now and 2027. Improving output and investment in CNG and gas projects is important. 

“If the AKK project is delivered, that will be used to generate energy for the economy and it will be another plus. Although this alone can’t give a $1trillion economy, it can do a lot to deliver cheap energy, power industries and generate electricity for the country if we have proper thermal plants that use gas.”

According to the professor, the Nigerian economy is a high-cost economy but he believes that cheap energy as targeted by the NNPCL will drive down the cost of production and make the economy more competitive.

Another significant project under Kyari’s purview is the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline, a 614 km infrastructure set to boost natural gas transportation across Nigeria by early 2025. 

Nigeria’s Minister of Finance and the Coordinating Minister of the Economy, Wale Edun lauded the AKK Gas pipeline as the pipeline of prosperity adding, “The AKK Gas Pipeline is crucial for this administration and its delivery is in line with Mr. President’s strategy of bringing prosperity to the people.”

•Ukpe writes from Abuja