NNPC E&P Targets $20bn Investment to Grow Oil, Gas Output in 5 Years

•Raises oil production by 30% in 12 months 

•Seplat reiterates plan to unlock 400 additional oil wells

Emmanuel Addeh in Abuja

NNPC Exploration and Production Limited (NEPL), a subsidiary of the Nigerian National Petroleum Company Limited (NNPC),  has said it requires about $4 billion investment annually  to boost Nigeria’s crude oil and gas production in the next five years.

A quick computation of the figure announced by the NEPL showed that by 2030, the company will need a funding of circa $20 billion in capital and operating expenditures to effectively carry out its activities.

The company also stated that aside from its over 370,000 bpd drilling target for 2025, it intends to raise this figure to 550,000 bpd by the end of 2027, a period of about three years.

Speaking on a panel in Abuja at the just concluded Nigeria International Energy Summit (NIES), the Managing Director of NEPL, Nicolas Foucart, noted that during the same period the NNPC E&P company will raise gas production to 3 billion cubic feet (bcf).

However, in terms of oil production, the activities of NEPL in the upstream differ from those of the NNPC Upstream Investment Management Services (NUIMS),  which  supervises the national oil company’s Joint Ventures (JVs), Production Sharing Contracts (PSCs), and Service Contracts (SCs) alongside operating partners in the industry.

For years, Nigeria has struggled to meet its Organisation of Petroleum Exporting Countries (OPEC) quota, but this has recently hit the 1.5 million bpd allocation as things begin to gradually pick up in the sector.

But Foucart argued that funding still remains a key issue to grow production of both existing and new set of assets, but said the NNPC subsidiary has a clear strategy on this in terms of sustainable production, cost optimisation, decarbonisation and people.

“So our plan is, from this year’s target, that we have 373,000 barrels average production for the year. That’s our target in 2025. To grow that to 550,000 barrels per day, that’s oil and condensate in the next three, four years. And from that production, we operate 65 per cent of that production.

“If I go to gas, today we are producing 1.4 BCF per day. And our strategic plan is showing that we should achieve close to 3 BCF over the next three, four years. Again, we operate 50 per cent of that production as NEPL.

“So you can imagine behind that plan, there’s a lot of activities and a lot of investment. If we look at our strategic plan, we are talking about $4 billion per year. That’s NEPL’s equity. Over the next five years, that’s the money we need to invest between OPEX and CapEx.

“So definitely, where is that fund coming from? And how can we make sure it’s going to be there? So of course, as a company, the fund will come from profit that we are generating. So it’s that’s the self-funding aspect, but also we’ve got external funding.

“So the way we’ve done that in NEPL, we’ve got financing entities, also providing some technical services in certain assets. So we operate those assets, and then there’s a joint team executing the activities. But it’s just to secure those funds from the shareholders, because that’s what it is when it’s self-funded,” he added.

Foucart pointed out that instead of sharing dividends, the NEPL could deploy the fund for financing its activities, explaining that either from shareholders or external entities, it wants to make sure that there is a business case and value behind all the projects.

He maintained that investors were looking for sustainability of projects, noting that at the NEPL, the company has looked back at historical performance and identified the root causes of underperformance over the years.

“And we looked then at the enablers that we need, and we have identified around 15 enablers that will help us to achieve those targets. And we built that under a transformation programme.

“So we’ve got a transformation office that has been set up in NEPL, helping us to implement all those initiatives that we have identified. And when I talk about initiatives and enablers, we are talking about sustainability, it’s all about focusing on maintenance integrity.

“So, we make sure that we’ve got the right level of maintenance of the rotating equipment to increase uptime, integrity of pipelines, we are doing sectional replacement, we’re starting to replace floor lines. We are looking at well intervention, which is cheaper. So we did a lot of that last year. So we’re looking at anything, processes, organisation, operating model across the assets,” the NEPL chief executive said.

Stressing that this requires long-term planning, he observed that the E&P company was gradually moving from short-term thinking to a long-term vision of how things should be done.

“So we’re working on those five-year plans. The idea is, if I bring a rig, let’s keep it, making sure it’s going to work for the next five years. And then we have the option, because we’ve got a big portfolio, to move those rigs across the different assets.

“That’s what we’ve been doing, I think, in the last 18, 24 months. And what have we seen? Well, last year, the average production of NEPL was 244,000 barrels. Today, we’re at 310,000, working towards the 370,000 barrels average for the year.

“So that’s a 30 per cent increase that we achieved, basically, in 12 months. That’s our strategy, giving confidence, and then we’ve got those finance, technical service agreements and assets on the gas,” he added.

In his intervention on one of the panels, Seplat’s Chief Executive, Roger Brown, reiterated that of the company’s recently acquired assets from Mobil Producing Nigeria Unlimited (MPNU), only about one-third was currently being operated.

After buying MPNU, he stated that over 1,000 workers from the company have since joined Seplat, but stated that they were already well trained and focused, given that they were the same human resources that helped ExxonMobil produce 700,000 barrels a day in the past.

He also lauded the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for handling up to five divestment applications simultaneously and creditably.

“So when I looked at it, I mean we predicted this back in 2010, I mean it was when Seplat started, we saw the divestments coming. But no one predicted five in the last year of the scale that we’ve seen.

“… Particularly, if I look at what we’ve bought from Mobil Producing, we’re only producing  one-third of the wells. So two-thirds of the wells are locked in. We have over 400 wells locked in. So we’re going to get those wells, that makes a lot of sense. We’re working through our infill drilling campaign and when I say it’s a campaign, it’s lots of wells,” Brown added.

Also speaking, President of the Nigerian Gas Association (NGA), Akachukwu Nwokedi, argued that the industry requires a measure of sustained transparency, confidence, and interdependencies between investors and stakeholders, such that investments in the upstream, midstream, and downstream are synchronised.

“However, to drive and encourage more investments, we must sustain the efforts to keep enacting investor-friendly policies, laws, and regulations that drive investments harmoniously across the gas value chain.

“That said, I must state that despite the welcome stability provided by the Petroleum Industry Act (PIA), we are still seeing laws and regulations that overlap and significantly increase the cost of doing business in Nigeria, which is not good for the gas sector. So it is important that we do not erode the visible gains witnessed by the sector. It is therefore time at this midway point to take stock and address these issues,” he maintained.