From Uche Usim, Abuja
The Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, yesterday disclosed that Nigeria, in the last one year, secured $2 billion discounts from renegotiated upstream contracts currently executed by its various service providers.
He said the feat was achieved in the quest to continually drive down the high cost of production in the industry. He stated this in a podcast message to his staff to mark his one year in office.
Baru, who took over the mantle of leadership of NNPC from the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, on July 4, 2016, said the NNPC had successfully lowered operating costs of production from $27/barrel to $22/barrel.
“For the upstream, cost reduction and efficiency are key features that we will pay attention to,” he said.
The NNPC boss directed that focal points for efficiency in each of the establishment’s Autonomous Business Units (ABUs) and Corporate Services Units (CSUs) should be identified to ensure the realisation of the key performance indicators enshrined in the 2017 budget, even as he vowed that the establishment must attain a six-month contracting cycle under his watch.
He added that there had been a significant increase in crude oil reserves and production, stressing that during the last one year, the national average daily production was 1.83 million barrels of oil and condensate while currently, the year-to-date (YTD) 2017 average production was around 1.88 million barrels.
He said with the improvement in security and resumption of production operation on the Forcados Oil Terminal (FOT) and Qua Iboe Terminal (QIT) pipelines, the average national production was expected to increase and surpass 2017 target of 2.2 million barrels of oil and condensate per day.
The GMD stated that in October last year, the Owowo Field, located close to the producing ExxonMobil-operated Usan Field was found, adding that the field’s location could allow for early production through a tie-back to the Usan Floating Production Storage and Offloading (FPSO).
The field, he noted, had added a current estimated reserves of one billion barrels to the national crude oil reserves.
Baru noted that the corporation had grown the production of the Nigerian Petroleum Development Company (NPDC), NNPC’s flagship upstream company, from 15,000 barrels of oil per day (bopd) to the current peak-operated volume of 210,000bopd in June 2017.
He stated that the ownership of Oil Mining Licence, OML13, had been restored to NPDC following a presidential intervention, with first oil from the well expected before the end of the year.
The GMD said the confidence of the NNPC JV partners to pursue new projects had been rekindled following the repayment agreements for JV cash call arrears that were negotiated and executed for outstanding up to end of 2015 by all the IOC partners of the corporation’s Joint Venture Companies (JVCs).
In the gas sector, the GMD said gas supply to power plants and industries in the country had been significantly increased.
“A lot of Generation Companies (Gencos) are rejecting gas due to the inability of Transmission Company of Nigeria (TCN), to wheel-out the power generated,” Baru said.
He noted that since his assumption of office a year ago, resources had been deployed to the Benue Trough, with exploration efforts commenced there in earnest.
He explained that seismic data acquisition was ongoing in the frontier region using the services of Integrated Data Services Limited (IDSL) and its partners to pursue government’s aspiration to grow the reserves base of the country. He said that drilling activities are expected to commence in the Benue Trough in Q4 this year.
The GMD said: “We are working with security agencies for an early return to the Chad Basin. Drilling activities will be a priority on resumption while continuing with seismic data acquisition with improved parameters.”
In the downstream sector, Baru explained that in the last one year, NNPC had stabilised the market with sufficient products availability across the country through modest local refining efforts as well as the Direct Supply Direct Purchase (DSDP) scheme, which he observed had saved the nation about N40 billion in 2017.
“We have also commenced the resuscitation of our products transportation pipelines network, thus enabling us move products to depots at faster rate and cheaper distribution costs to consumers. The Aba, Mosimi, Atlas-Cove and Kano Depots have all been re-commissioned and are currently receiving products, thereby enhancing products availability across the country,” the GMD said.
He said in the last one year, NNPC had improved capacity utilisation of the refineries with the projection that they would attain supplying 50 per cent of the non-gasoline white products to the nation, including diesel and kerosene that are commonly consumed in the country.
The GMD said after more than seven years of dormancy, the Asphalt Blowing Unit of the Kaduna Refining and Petrochemical Company (KRPC) was resuscitated to meet road construction needs in the country.
He declared that efforts were ongoing to secure third party financing to revamp the refineries to their full operational capacities.