Politics

A bond with performance

President Muhammadu Buhari precisely on June 20, 2019, approved the appointment of Mallam Mele Kyari as the new Group Managing Director of the Nigerian National Petroleum Corporation (NNPC).

 

Just over a couple of weeks later, on July 8, 2019, Kyari, flanked by members of his brand new management team, assumed leadership as the 19th GMD of the NNPC, an entity which has been variously described as Nigeria’s biggest and most important government-owned enterprise.

 

Interestingly, even before his assumption of duty, Kyari had been the toast of oil and gas industry stakeholders and the news media across board with rave reviews and streams of kind but informed comments cum forecasts of an anticipated successful tenure as GMD of NNPC.

 

But beyond the excitement and favourable stakeholders’ disposition towards his emergence as the “Operator-in-Chief’’ of the Nigerian oil and gas industry, the big question is:

 

How well has Kyari and his team performed since their appointment? A sector by sector analysis of the activities of the corporation in the last 12 months would provide a clear picture.

 

Upstream: Resolution of Shell/Belema Crisis, NPDC on the high

 

Regarded as the mother of the oil and gas industry, the upstream sector sets the pace of progress and functionality of the industry.

 

It captures all activities and field operations in the search for potential and possible underground or underwater deposits of commercial hydrocarbon and stretches to all activities involved in the subsequent exploitation of such deposits for commercial benefits.

 

Within the period, the upstream sector in the corporation has been energized with value added operations with potential to yield billions of dollars to the corporation and the country at large.

 

This has been made manifest with the demonstrable steps to make the corporation’s flagship upstream entity, the Nigeria Petroleum Development Company (NPDC), attain enviable heights in the comity of renowned Exploration and Production companies.

 

A few days after Kyari’s assumption of office, the NNPC announced the execution of the N875.75m NPDC OML 65 Alternative Funding and Technical Services package with CMES-OMS Petroleum Development Company.

 

Apart from the projected fresh $6.35bn which would accrue to the Federal Government in taxes and royalties throughout the duration of the project, the package has massive job creation opportunities for the industry and host community contractors down the line.

 

The uptick in the upstream activities was enlarged with the signing of a $3.15bn alternative financing package with Sterling Exploration and Energy Production Company Limited (SEEPCO) and other partners for NPDC’s OML 13. Based on available projections, the Federation is expected to earn over $10.2bn in royalties and taxes from the project over 15 years while NNPC will earn $5 billion.

 

The acreage has over 926 million stock tank barrels (mmstb) and 5.24 trillion cubic feet (tcf) respectively of oil and gas reserves and the Financing and Technical Services Agreement is for a period of 15 years, while the $3.15 billion ceiling funding would be provided by SEEPCO with a 10-year capital investment period and five years for cost recovery.

 

First oil of about 7,900bpd was achieved from the project on April 1, 2020, while production is expected to peak at 94,000bpd and 542mmscfd within four years. The project which would help boost Nigeria’s aspiration of 3 million barrels per day production target is also expected to enhance participation by indigenous companies in the industry by providing over 2,000 direct and indirect job opportunities.

 

It is also worthy of note that the OML 13 is 100 per cent owned by the NPDC and is

 

 

 

located in the eastern axis of the Niger Delta covering a total area of 1987km². The NPDC also recorded another feat with the execution of novation agreement for transfer of NNPC’S interests in OMLs 60, 61, 62 and 63 to NPDC to grow the company into a formidable exploration and production entity. The agreement which was entered among NNPC, Oando and Nigerian Agip Oil Company (NAOC) essentially allows NPDC to take over the divested Federal Government’s interest in the NNPC/ NAOC joint ventures.

 

“This means we have transferred those interests to the Nigerian Petroleum Development Company (NPDC) in order to grow NPDC, to become a medium-size Upstream company that the federation and the NNPC would be proud of,” Mallam Kyari said during the brief ceremony at the NNPC Towers.

 

Apart from providing comfort for NPDC and its partners, the novation agreement is expected to also open a new chapter of business for NPDC and the entire partnership and create a new frontier for revenues for the companies as well as the nation at large. Also on same day, the Corporation achieved the successful execution of the Abo OML 125 Heads of Terms between NNPC and Nigeria Agip Exploration Limited (NAE).

 

The agreement marked significant advancement in resolving issues around most deep offshore production sharing contracts – paving the way for eventual renewal of OML 125 and further investment in exploring the potentially lucrative Abo field resources.

 

The string of upstream successes was sustained with the smooth resolution of the intractable Shell/Belema Oil – OML 25 community crisis. For over two years the host communities in Kula Kingdom of Akuku Toru Local Government Area of Rivers State were engaged in bitter conflict with the operator over sundry community relations issues.

 

The intervention of Kyari led to the rapprochement which did not only guarantee restoration of peace to the host communities and environs but assured the restoration of 35, 000 barrels daily production of crude oil. Within the period under focus, the Integrated Data Services Limited (IDSL) the NNPC Upstream subsidiary in charge of acquisition and interpretation of seismic data achieved 20 per cent year-on-year revenue growth and completion of eight reservoir studies alongside the upgrade of IDSL’s Data Processing Center.

 

A new crude oil and gas province was unveiled to the world with the discovery of commercial hydrocarbon deposits in Kolmani River II Well in Gongola Basin, Upper Benue Trough. The feat brought to a successful climax over 40 years of spirited search for commercial crude oil deposits in the inland sedimentary basin.

 

 

Downstream – Operation White, NNPC Retail Lubs Market Entry

In terms of scope and operation, the downstream sector among other features covers the marketing, supply and distribution of products derived from crude oil and natural gas.

 

Within the last 12 months a cursory appraisal of the fuel supply and distribution system in the country would indicate the total disappearance of fuel queues or what the NNPC media people would readily describe as “artificially induced fuel queues.”

 

Significant as this feat may appear, a further inquest into the downstream activities would reveal the entrenchment of measures which would not only provide the uninterrupted supply and distribution of petroleum products but would guarantee efficient and accountable availability of fuel from vessel to the fuel tank of consumers at the filling station.

 

This was made possible by the introduction of Operation White, a transparency initiative designed to make petroleum products imports, supply and distribution more effective and accountable.

 

Recall that Operation White is a collaborative initiative mandated by the Presidency and driven by NNPC with active participation of Regulatory Agencies, Security Agencies and other Stakeholders to ensure all molecules of regulated petroleum products imported by NNPC are well accounted for and utilized in-country.

 

The first phase of the three-phase project was launched with the successful inauguration of an 89-Man Products Monitoring Team (PMT) mandated to employ technology and human resources for a round-the-clock monitoring of product supply, discharge and truck-out activities at petroleum products depots nationwide.

 

Rising from its inauguration at the NNPC Towers by the Honourable Minister of State Petroleum Resources, Chief Timipre Sylva, the PMT went to work with the sole aim of ensuring that the dark old days of opacity and ineptitude in the importation and distribution of petroleum products in Nigeria were confined to the history books for good.

 

The target was to enshrine a comprehensive 3-phase strategy primed to utilize a combination of human resources and cuttingedge technology to entrench transparency, accountability and efficiency in the product supply and distribution chain.

 

The first phase involved monitoring of petroleum product supply, discharge and truck-out activities at various depots nationwide for data gathering. The data so generated will be collated and validated with a view to utilizing same for planning purposes, among others. At the end of the successful execution of the first phase, the strategy will dovetail into the second phase which is the full automation of all processes in the downstream petroleum landscape.

 

The ultimate goal is to put in place critical processes and systems that will support the target of attaining national domestic self-sufficiency and exiting importation in the mid to long term. Members of the team were drawn from the NNPC, Department of Petroleum Resources (DPR), Petroleum Products Pricing Regulatory Agency (PPPRA), Petroleum Equalization Fund (PEF), as well as the Department of State Services (DSS).

 

As a collaborative project, Operation White has something for everyone – government, marketers and ordinary Nigerians. It guarantees access to affordable petroleum products in line with the intended target of the regulated supply system; it provides level playing ground for healthy competition among all marketers and reduces government’s costs and increases revenue to all tiers of government for development projects.

 

Those who should know say, it enhances energy security through containment of PMS distribution in-country and improves transparency and accountability in the nation’s downstream industry. Ultimately, it would create job opportunities in the downstream sector and help arrest social unrest.

 

The projection is that Operation White would monitor and track every molecule of petroleum product imported into the country and follow it through to the pump – an action that had been missing in previous efforts to sanitize petrol distribution.

 

The petroleum products supply and distribution efforts were further enhanced with the resuscitation of the Ilorin Depots last year bringing to an end eight years of inactivity in the facility which functions as the terminal point of the strategic NNPC System 2B Pipeline network stretching from the Atlas Cove in Lagos.

 

Later, the downstream sector was further energized with the grand entry of NNPC Retail Limited into the nation’s engine oil market with high performance lubricants over a broad range to provide better options to customers across the country.

 

According to the NNPC, the package has on offer Nitro (Diamond, Gold, Super, 2T) and Nitro Super 40, all designed for  petrol-power engines, while the diesel propelled engines have the Rhino (Rhino HD40 & Rhino X) engine oils. The entry of NNPC into the lubricant market was to ensure that the corporation opened up new areas of revenue generation while ensuring stakeholders reaped bountifully from the participation of the corporation in the entire value chain of the Oil and Gas Industry.

 

The business strategy was to leverage on the corporation’s strong brand essence anchored overtime on customers’ trust and expectations to give Nigerians value for money. The NNPC hopes to continue to provide the needed support and encouragement to its Retail unit to keep up the required standards and fulfil its mandate and obligation to stakeholders.

 

From all indications, the entry of the company into the engine oil market is already providing refreshing options to customers as the new products have all the required ISO certification while the company is taking full advantage of its massive outreach across Nigeria to push the products to all corners of the country.

 

Gas and Power

 

Without any doubt, the biggest event in the Gas sector for years to come was the historic successful Sign Off of the hitherto protracted NLNG Train-7 Final Investment Decision.

 

The project is expected to generate over $20billion of revenue to the Government over the project’s lifecycle, 10,000 direct and 40,000 indirect jobs. Before then, the corporation recorded a major feat with the recovery of over N80billion and US$45million debt from gas off takers, a feat which energized the sector.

 

Good Governance – Launch of TAPE Agenda, Publication of NNPC Audited Financial Statements 2018 and 2019

 

The NNPC under Kyari is anchoring its operations based on the well-articulated TAPE agenda which translates to Transparency, Accountability and Performance Excellence. Under the TAPE blueprint, the Transparency branch of the tree is configured to maintain positive image, share values of integrity and transparency to all stakeholders.

 

The package also has on offer; improved Stakeholder communications, knowledge and data sharing, effective communication of the key business objectives and targets, expansion of transparency in contracting, creation of space for feedback and zero tolerance to insider trading among other objectives. The Accountability leg of the campaign on the other level is designed to assure compliance with business ethics, policies, regulations and accountability to all stakeholders.

 

Essentially, the Accountability portion seeks to deliver a scenario where the Corporation would deliver on its commitments and answerable for its actions by ensuring strict compliance with business  ethics, policies and regulations.

 

The bundle also has on offer, reliable financial reporting, elimination of discretion, clear-eyed understanding of the NNPC mandate and how it contributes to the bottom and enforcement of consequence management system. In terms of the two-prong item of Performance Excellence, the idea is to entrench high level rate of efficiency anchored on efficient implementation of business processes which would also emplace apt reward system for exceptional performance among the workforce.

 

Overall, this component seeks to enshrine effective and efficient operations across the NNPC group through; defined team’s strategy in line with strategic business objectives and projected outcomes, effective and efficient service delivery, institutionalize performance management system, build skills, capacity and staff empowerment and pursue deliberate improvement in value creation.

 

So far, TAPE has enabled the Corporation achieve quick harvest of some low hanging fruits ranging from Implementation of SAP Solutions (Travel Management, User Interface, Procure to Pay, Funds Management) and integration of REMITA and ECM to Implementation of Centralized Invoice Submission among others.

 

The TAPE agenda also witnessed the Kick-off of the NNPC employee recognition campaign which saw the NNPC GMD host some deserving staff members to dinner and issuance of letters of commendation for outstanding performance.

 

 

The Corporation has also achieved significant reduction of negative media and imagery through improved transparency and proactive stakeholder engagements.

 

The NNPC under Kyari received massive commendation across board for the novel publication of the 2018 and 2019 Audited Financial Statements of 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.

 

Within the period, NNPC also posted a major feat with the successful conclusion of the 2019/2020 NNPC recruitment exercise with the virtual assumption of duty of 1050 Graduate Trainees.

 

COVID -19 Interventions

Away from his routine function as Group Managing Director of the NNPC, Mallam Mele Kyari has demonstrated great capacity to rise up to challenging situations by rallying stakeholders in the Oil and Gas industry to provide material support to the Federal Government as well as state governments in the fight against COVID-19 pandemic. Operating under the auspices of the Petroleum Industry Intervention on Covid-19, the NNPC led Initiative has thus far earmarked N21bn to provide support.

 

Under the arrangement, the group has reportedly allocated 26 per cent of the intervention funding to the deployment of logistics and in-patient support systems and 21 per cent of the sum to provision of medical consumables across the country while the balance of 53 per cent is designated for the construction of medical infrastructure across the six geo-political zones of the country.

 

 

GMD Kyari’s achievements

 

Discovery of crude oil in the Kolmani Structure in the Upper Benue Trough.
NPDC: OML 13 reentry, recorded 32% and 21% incremental production in OMLs 40 and 30 respectively.

Signing of a Funding & Technical Services Agreement (FTSA) and Alternative
Financing deal for NPDC’s OML 13- US$3.15bn and OML 65 – US$876mn.
Achieved 20% year-on-year revenue growth in IDSL and completion of eight (8)
reservoir studies alongside the upgrade of IDSL’s Data Processing Center.
US$300 million reduction in AKK project cost via contract renegotiation.

 

Completed Port Harcourt RC Rehabilitation
Phase 1 (Plant Integrity Inspection and
Studies).

Completed feasibility studies for
Condensate Refinery Project and the award
of the Front End Engineering Design (FEED).
Sustained seamless petroleum products
supply and distribution.

 

Improved petroleum products accounting
through “Operation White”.

 

Launched NNPC Retail Limited lubes to the
Nigerian market.

 

Commissioned Ilorin Depot, two (2) Tanks at
Calabar and Satellite Depots.

 

Recovered over N80 billion and US$45
million debt from our gas off takers.

 

Implemented SAP Solutions (Travel
Management, Fiori User Interface, Procure
to Pay, Funds Management) and integrated
with REMITA and ECM.

 

Implemented Centralized Invoice
Submission process to reduce procure to
pay cycle.

 

Obtained and launched NHIS Operational License for NNPC HMO Limited.

 

Launch of the NNPC Code of Conduct and launch of Tip Portal.

 

Containment of negative media and imagery through improved transparency and proactive stakeholder engagements.

 

Kicked off employee recognition campaign
by hosting a dinner for identified
outstanding teams.

 

Signed off on the Final investment Decision (FID) for NLNG Train 7 (T7). This is a wonderful climax for the year. The project is expected to generate over $20billion of revenue to the Government over the project’s lifecycle:
10,000 direct and 40,000 indirect jobs. This comes as a testament to the attractiveness of Nigeria as an investment destination.

 

For these outstanding achievements, NNPC under the leadership of Mele Kyari is New Telegraph’s winner of Government Agency of the Year (Transparency).

 

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