NNPC started its week with the declaration of its readiness to introduce regulations and criteria to guide its partners in the sector.
The Nigerian National Petroleum Corporation (NNPC) started its week with the declaration of its readiness to introduce regulations and criteria to guide its partners about divestments in the nation’s oil and gas industry.
NNPC Group Managing Director, Malam Mele Kyari, disclosed this at the opening ceremony of the 2021 edition of the Nigeria Annual International Conference and Exhibition (NAICE) organised by the Society of Petroleum Engineers (SPE) in Lagos.
He spoke on the theme “The Future of Energy: A Trilogy of Climate Change, Public Health & Global Oil Market,”
He affirmed that the Corporation had worked out rules to guide partners on such issues as asset abandonment; relinquishment costs; severance of operator staff; third party contract liabilities; technical, operational and financial capabilities as well as competency of the buyer and post-purchase development plan.
He said such a guideline had become necessary in order to safeguard the nation’s strategic interest in the face of the global sentiment against funding of fossil fuel projects.
Kyari noted that in subsequent deals, NNPC would introduce new rules of engagement in order to make a clear distinction between divestment of equity shares and operatorship in the various joint operating agreements in order to leverage its rights of pre-emption.
He added that there would also be clear criteria for evaluating the operational competency and track records of new partners.
He also stated that the new policy would be geared towards converting asset abandonment and relinquishment costs into opportunities to further grow the Nigerian Petroleum Development Company (NPDC), which he said has become the number one upstream company in Nigeria as at today.
“Everything we are doing must be done in line with national interest. NNPC as a national oil company that represents all of us must be a global player.
“This is our ambition and we are getting there. I can tell you that within the next one or two months, we are going to publish our Audited Financial Statement for 2020. I can also confirm to you that for the first time in our history, we will declare profits,” Kyari said.
He said the Corporation would continue to play a pivotal role in the global energy transition as part of its commitment to promote low carbon investments by whetting the appetite of investors in cleaner energy sources like wind, solar, hydrogen, natural gas and bio-fuels.
“We are deepening natural gas utilization under the National Gas Expansion Programme (NGEP) to earn more carbon credit and create a net zero carbon environment in line with our drive of becoming an energy company of global excellence,” Kyari stated.
He noted that from the anticipated economic growth, rising global population and energy requirement, renewable energy sources alone would not be able to meet the energy demand by 2050, stressing that gas would still be a vital part of the global energy mix.
He said the passage of the Petroleum Industry Bill (PIB) would enable the Corporation to focus more on improving oil and gas infrastructure through collaboration with major stakeholders, adding that NNPC was working with operators and service contractors to challenge cost of operations and increase profitability in the oil and gas sector.
Also in the week under review, the Senegalese government seeks Nigeria’s support to develop their nation’s oil and gas sector.
The Minister of State for Petroleum Resources, Chief Timpre Sylva, receiving the Senegalese Energy Minister, Aissitou Gladima and her delegation in Abuja said that Africa needed to come together and work to support development of the region and reduce over-dependence on foreigners for growth.
“I want to use this opportunity to welcome you. As I said, it is important for us as a region to come together because as they say, you have to say yes before someone from outside says yes to you. We, as Africans, must come together to work together in order to chart a way forward. We cannot continue to depend on Europe and the outside world,” he said.
He said that oil production activities started in Nigeria in 1937 but commercial discovery was made in 1950s, adding that first commercial discovery was made in 1956 and first cargo of crude left Nigeria in 1958.
On local content, he said that Nigeria had grown its local content from three per cent in the past 10 years to about 43 per cent and the growth target is 70 per cent by 2027.
In her remarks, Gladima thanked her Nigerian counterpart for the hospitality extended to her delegation, adding that her country had longed to partner with Nigeria to gain from its wealth of experience in the oil and gas sector.
She said that Nigeria’s over 50 years’ experience in oil production was an excellent example for Senegal as it is beginning to grow its own oil and gas industry.
She expressed her country’s interest to join the African Petroleum Producers’ Organization (APPO) to help the development of the oil sector in Senegal.
Also the Corporation was able to weather the impact of COVID-19 with impressive performance in 2020 financial year. Some of its subsidiaries posted impressive financial results at their various annual general meetings which held virtually recently.
The Integrated Data Services Limited (IDSL), an Upstream subsidiary of NNPC with interest in the acquisition, processing, and interpretation of seismic data as well as reservoir management services, announced a revenue of N18.71billion in 2020.
Giving a general review of the performances of the various Strategic Business Units, the Chief Financial Officer of the NNPC, Mr Umar Ajiya, said the positive performance from the various subsidiaries show how prepared the companies are for the post-Petroleum Industry Bill regime.
Speaking at the IDSL AGM, the Chairman of company’s Board of Directors, Mr Adeyemi Adetunji, said though the performance was below target, the company made progress in its priority areas.
“In 2020, we carried on with our five Key Priority Areas from the previous year.
“They included growing our revenue, increasing our market share across our service lines, maintaining a minimum operating cost to revenue ratio of 90 per cent expanding IDSL’s capabilities in Marine Data acquisition and reducing contracting cycle. Our efforts yielded amazing results”.
Acting Managing Director of the company, Mr Olufemi Sijuade, said the company would continue to add value to the society without compromising requisite generation of returns to its shareholders.
The results were also positive for the National Engineering and Technical Company Limited, (NETCO), which recorded N3.37billion as profit before tax for the 2020 financial year.
The outstanding performance by NETCO, according to the Chairman of the board, Engr. Adeyemi Adetunji, was a result of ingenuity and commitment on the part of its Management.
“In spite challenges, NETCO posted a profit before tax of N3.37billion, which represents an increase of 53.94 per cent from N2.2billion in 2019. In view of the company’s performance, I am pleased to inform the meeting that NETCO remains a viable company and will be declaring a dividend of 40kobo per share to the shareholders at this AGM,’’ he said.
He also revealed that in addition to the huge profit, the company secured, for the first time, the Projects Management Consultancy/Owner’s Engineer Services Contract for the rehabilitation of NNPC’s three refineries, making it the main engineering consultant for the projects.
In his remarks, the Managing Director of NETCO, Mr Usman Baba, said the improvement was as a result of some deliberate cost-cutting measures undertaken by his management team to boost profitability.
He said the company would continue to leverage on the NNPC’s current Transparency, Accountability and Performance Excellence (TAPE) initiative to remain commercially viable.
The outstanding performance continued with the Nigerian Gas Marketing Company (NGMC), which recorded a profit after tax of ₦41.7billion in the year ended 2020, representing a massive 311 per cent increase over its 2019 figures.
Also, Mr Yusuf Usman, Chief Operating Officer, Gas & Power who also doubles as Alternate Chairman of the NGMC Board, disclosed that the astronomical leap in profit was achieved in spite of the challenges of low gas off-take due to the economic downturn caused by the COVID-19 pandemic.
He said the company’s revenue profile for the year rose to N215.45 billion as against N212.93 billon recorded in 2019.
Usman noted that since the last AGM, NGMC has made some key changes in terms of operational cost reduction and process optimization leading to increased operational performance in the year under review.
“In alignment with NNPC’s strategic goal to accelerate domestic gas utilization across the country, NGMC has expanded its gas distribution portfolio to a number of strategic partners across the country. We are optimistic that this will add to NGMC bottom-line going forward,” he said.
Providing further insight into the 2020 performance, the Managing Director, Engr Faruk Usman, informed that the cost optimization measures led to a total gas sales volume of 103 billion standard cubic feet as against a planned target of 100.17BCF.
NGMC also achieved Goal Zero in its Health Safety and Environment (HSE) indices -which harps on zero incidents in operation.
He announced that in consonance with the NNPC GMD’s directive to reduce cost of gas to achieve the company’s Credit Information Report (CIR) Target, NGMC successfully negotiated downward the price of feed gas with some producers.
“In the same vein, we renegotiated lower mark-ups in our service contracts, thereby significantly reducing operating expenses,’’ he said.
Also, the Petroleum Products Marketing Company Limited (PPMC) was not left out of the impressive outings as it posted a net profit after tax of N3.59billion in the 2020 financial year.
The NNPC GMD, who also doubles as the Chairman of the Board of Directors of the Company, said in spite of the challenges posed by the Covid-19 pandemic and the lockdown, the company was able to end 2020 on a positive note.
Kyari, who was represented by the Chief Operating Officer, Ventures and Business Development, Engr. Adeyemi Adetunji, said the company sold a total of 18.17billion litres of petroleum products at a total value of N2.02 trillion.
“A total of 26.09billion litres of petroleum products was imported during the year under review, with Premium Motor Spirit (PMS) accounting for 94.27 per cent of the import, Automotive Gas Oil (AGO) 5.1 per cent, Dual Purpose Kerosene (DPK) 0.24 per cent and Aviation Turbine Kerosene (ATK) 0.39 per cent,” the GMD revealed.
He noted that there was 15 per cent increase in petroleum products imported in the year 2020 when compared with 22.6billion litres for the full year 2019, stressing that the increase was occasioned by a sharp rise in demand for PMS after the Covid-19 lockdown eased off.
The Chairman described the company as the livewire of the nation’s downstream sector, stressing that it has been very strategic in getting NNPC to meet its statutory obligation of providing energy security for the nation in terms of petroleum products sufficiency.
Also speaking at the AGM, the Managing Director of the PPMC, Mr Musa Lawan, said the company has been repositioned to become the preferred marketer of petroleum products through the automation of its processes, commercial orientation and financial autonomy.
In the same vein, the Gas and Power Investment Company Limited (NGPIC), another subsidiary of the corporation laid a solid foundation for growth and profitability in the years ahead.
The Chairman of the NGPIC Board of Directors Mr Umar Ajiya, at the maiden Annual General Meeting listed some of the key steps taken to put the company on a firm financial footing to include: completion of the 1st and 2nd Gas Turbines for the 450MW Okpai Phase 2 Independent Power Plant (IPP) in Kwale, Delta State, completion of Feasibility Study/Front End Engineering Design (FEED) for the 1350MW Kano IPP, and the actualization of full transfer of 15 per cent equity shares in the ongoing 1050MW Kwale Independent Power Project (IPP) to NGPIC.
Other achievements are: the acquisition of 20 per cent equity in Brass Fertilizer and Petrochemical Project (BFPCL), completion of feasibility study and Front-End Engineering Design (FEED) for 1350MW Abuja IPP, and completion of migration of NGPIC accounts into SAP.
He said NGPIC would leverage on the expected positive impact of the ongoing Presidential Power Initiative (PPI) to improve business operations for profitability.
“Despite the economic slowdown and challenges peculiar to Nigeria’s Oil, Gas and Power & non-power gas-based businesses, NGPIC has continued to improve its performance. The growth may currently be little, however, with continued commitment from our Shareholders, Management and colleagues, we are quite optimistic of a bright future for NGPIC. Please be assured that NGPIC is very much poised for profitability and performance excellence”.
In his remarks, the Managing Director of NGPIC, Dr Salihu Jamari, said with continued support of shareholders and the management team’s determination to leave lasting legacy, the company would grow into a viable profit centre in no distant future.NNPC Subsidiaries Post Impressive Performances in 2020 Financial Year.NNPC Subsidiaries Post Impressive Performances in 2020 Financial Year.
On the Monthly Financial and Operation Report (MFOR) of the Corporation, it recorded N234.63billion on Petroleum products Sales in the month of March 2021. The sales were made by its subsidiary the Petroleum Products Marketing Company (PPMC) compared to ₦188.15 billion sales in February 2021.
The report indicates that total revenues generated from the sales of white products for the period March 2020 to March 2021 stood at ₦2.129trillion, where petrol contributed about 99.24 per cent of the total sales with a value of ₦2.113trllion.
To ensure continuous increased PMS supply and effective distribution across the country, the NNPC has continued to diligently monitor the daily stock of PMS to achieve smooth distribution of petroleum products and zero fuel queue across Nigeria.
The report informed that in March 2021, 70 pipeline points were vandalized representing 29.63per cent increase from the 54 points recorded in February 2021.
During the period, Port Harcourt area accounted for 63 per cent and Mosimi Area accounted for 21per cent of the vandalized points while Gombe accounted for the remaining 16 per cent.
However, NNPC in collaboration with the local communities and other stakeholders continuously strive to reduce and eventually eliminate this menace.
In the Gas sector, a total of 222.74 billion Cubic Feet (BCF) of natural gas was produced in the month March 2021 translating to an average daily production of 7,183.33 million Standard Cubic Feet per Day (mmscfd).
Production from Joint Ventures (JVs), Production Sharing Contracts (PSCs) and NPDC contributed about 63.23 per cent 19.78 per cent and 63.99 per cent respectively to the total national gas production.
What you need to know
The NNPC will ensure that Nigeria’s National Strategic Interest is safeguarded by developing a comprehensive policy for its partners.
The NNPC will make clear Distinction between divestment of shares and operatorship agreements under various joint operation agreements.
The NNPC will leverage its rights of pre-emption to evaluate the operational competency and track records of new partners.
In order to ensure that the corporation sustains a prosperous business environment, it is paying attention to abandonment and relinquishment costs severance of Operator staff, Third party contract liabilities and competency of the buyer to mention but a few.
As a national oil company and a global player, NNPC is set to play key role in global transition to low carbon energy in the near future with Natural gas reserve serving as greatest enablerto smooth transition to low carbon energy.
On global crude oil outlook, U.S. Oil Drops for 3rd Day On Concerns COVID-19 Variant Spread.
The United States of America oil prices fell while Brent futures were largely unchanged on mounting concerns that the increasing spread of the Delta variant of the coronavirus in top consuming countries will cut fuel demand.
Brent crude oil futures added 1 cent to 72.42 dollar per barrel while the United States of America West Texas Intermediate (WTI) crude fell 7 cents, or 0.1, to 70.49 dollars per barrel.
Both futures fell to their lowest since July 21 before regaining some ground by the close.
Meanwhile, the Market Intelligence Department of NNPC’s London Office reported that another spike in Covid-19 infections in major economies hammered oil markets during the week, although prices later regained some lost ground in volatile trading.
In London, the front-month October contract for Brent retreated by 48¢ to 72.41 dollars per barrel on relatively light trade, while in New York, the September contract for West Texas Intermediate (WTI) shed 70¢ to end at 70.56 dollars /bbl.
Oil prices have tanked by almost five per cent over fear of the Delta variant of the coronavirus in the last few dayswith traders, however, hoping for a boost for the best in the years ahead.(NAN)(www.nannews.ng)
