…As FG targets 3m bpd next year
Nigeria’s hope of ending fuel importation was yesterday dashed as the Nigerian National Petroleum Corporation (NNPC) said it would take more years to get the refineries back on stream.
Group Managing Director of NNPC, Dr. Maikanti Baru, stated this while responding to questions from the media on the sidelines of the ongoing Offshore Technology Conference (OTC), in Houston, Texas, USA which entered its second day on Tuesday.
He explained that the inability of the refineries to operate at installed capacities was because their rehabilitation had been hampered by lack of regular Turn Around Maintenance (TAM) over the years, adding it would take more years to get them back to full capacity.
Baru, who was represented by the Chief Operating Officer (CEO), Gas and Power, Saidu Mohammed, said for the country to exit petrol importation in 2019, new refineries that will co-locate with existing ones will be built.
“Don’t forget also that for us to exit PMS importation in 2019, we have to also bring in new refineries that will co-locate with existing ones together with the new ones that will be built across the country. Then, we see ourselves as a net exporter of products. On this, I can tell you that we are on course,” he added.
Baru said as of today, all the nation’s three refineries are producing petroleum products. “We load out at least 5 to 6 million litres of petrol daily and about that same quantity of Automotive Gas Oil (AGO) daily from the three refineries. That is part of what is making the PMS market in Nigeria stable today. We believe that the set target of exiting PMS importation in 2019 is achievable,” he stated.
He observed that following NNPC’s foray into the energy sector through electricity generation and other renewables, Nigeria’s perennial power sector woes may soon be over. “Essentially NNPC has been there. Many people don’t know that the NNPC has been part of the power sector. We supply steadily about 1,000mw from Afam and Okpai, two of Nigeria’s most reliable power plants serving as one of the cheapest sources of power today in the country,” he noted.
According to the GMD, NNPC has engaged its Joint Venture (JV) partners, Chevron and Total, to build similar power plants at Obite and Agura.
He said the Corporation was also looking at bringing in new investors. “We have advertised and are currently evaluating potential partners in this regard,” he said. The GMD further observed that the Corporation was fulfilling part of its commercial obligations to Nigeria’s energy sector through power supply from Afam and Okpai as well as excess power from its refineries, adding that its role in the power sector will be enhanced with the completion of the power plants it has started and most especially the three mega power plants in Abuja-Kaduna-Kano (with combined capacity of 3000mw).
He said the NNPC was attending the OTC 2017 in order to attract potential investors and most significantly, to showcase its efforts of transforming into a full-fledged energy company.
“We are here to showcase to people who have the capacity, competence and technology to invest in Nigeria and help us increase our reserves and enhance the capacity of especially our exploration and production subsidiary, the Nigerian Petroleum Development Company (NPDC).
According to him, although NPDC’s production has been hampered by security challenges in recent times, management has made strategic interventions to ramp up the company’s production within the next few years.
“Essentially, we want to raise NPDC’s entire production capacity by about 700,000 barrels per day (bpd) and by other partners to about 300,000bpd. So that, ultimately, we’ll raise Nigeria’s production to about 3 million bpd,” he noted.
He noted that in line with its transformation agenda, the corporation was aligning its 12 Business Focus Areas with Federal Government’s 7-Big Wins as championed by the Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu.
Meanwhile, citing a number of projects that would come on stream between now and next year, the Federal Government has assured that Nigeria’s oil production would hit nearly 3 million bpd from the current 2.2 million bpd next year.
Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, who stated this while fielding questions from the media at the ongoing Oil Technology Conference (OTC) in Houston Texas, USA, said “we have today cumulative number of projects that are coming back which should between now and next year, give us additional 700,000 barrels, over and above the 2.2 million bpd.
That is why I can say with confidence that we are in a position to move up to 3 million bpd very quickly,” Kachikwu said.
On cash call, he said the structure of the JV cash call previously was that all income went back to the Federation Account and from there budget was made.
He, however, stated that “even with the budget, monies were not remitted hence the cost and revenue were squandered. What this has done now is to skew that to the other direction – that from production, after royalty, you take away the cost of production on a budgeted basis. Then the balance goes back to the Federation Account. Hopefully, going forward, we shouldn’t have that problem again.
“What we cannot cover in terms of budget, the oil companies will go out to raise a loan from third parties to enable them continue their much more aggressive exploration and production,” he said.
He also said that the Federal Government would from 2018 stop the sponsorship to the yearly OTC. He said this at a meeting with investors, business leaders and stakeholders in the oil and gas sector in Houston.
The OTC, currently ongoing, is an annual event that brings experts in the oil and gas sector to brainstorm and find new solutions to challenges in the industry.
According to Kachikwu, the government, last year, sponsored 250 delegates while this year’s number to the OTC has been cut to 50. Next year, he said, the government will only sponsor less than 20 officials whose job functions require them to attend.
“There will no longer be sponsorship to the OTC except for very technical experts. Everyone willing to come to the conference in future should fund his way,” he said.
“We will, however, work to build an OTC that the world would buoyantly come to the same way we buoyantly come to yours,’’ he added.