NNPC GMD, Dr. Maikanti Baru, declaring open the 2019 edition of the Nigeria Oil and Gas Conference and Exhibition. He is flanked by the Executive Secretary, Nigerian Content Development and Monitoring Board, Engr. Simbi Wabote (left), NNPC GMD-Designate, Mr. Mele Kyari (2nd from right),and other oil and gas industry leaders.
…Assures of More High-Yield Investment Opportunities
The Nigeria oil and gas industry is still a major investment destination in Africa grossing over 24.8 per cent of foreign direct investments coming to the African continent.
This was disclosed by the Group General Manager, Group Public Affairs Division of the Nigerian National Petroleum Corporation, NNPC, Mr. Ndu Ughamadu, which quoted the Group Managing Director of NNPC, Dr. Maikanti Baru, as saying that out of about $194billion capital investment flow into Africa for the period 2018 to 2025, $48.04bn came to the Nigerian oil and gas sector for various development projects.
Dr. Baru who made the assertion in a keynote address while declaring open the 2019 edition of the Nigeria Oil and Gas Strategic Conference and International Exhibition at the International Conference Centre in Abuja informed that the oil and gas industry was an essential building block in the nation’s economic growth.
Speaking on the theme of this year’s NOG Conference “Promoting Investment and Collaboration in Nigeria’s Oil and Gas Industry”, the NNPC helmsman stated that from the Upstream to the Midstream and Downstream sub-sectors, the Nigerian oil and gas industry was replete with massive investment opportunities.
“Nigeria holds about 2.2 per cent of global oil reserves. Our crude oil reserves have grown steadily from about 22 billion barrels in 1999 to 37.5billion barrels in 2018. Nigeria is home to the second largest crude oil reserves in Africa after Libya. Our crude oil production currently hovers around 2.2 -2.3 million barrels of oil per day (bopd). This was bolstered by the coming on stream of the Egina Field in December 2018 and which has currently ramped up to 200,000bopd,” Baru stated.
On the gas side, he said Nigeria has the 9th largest gas reserves in the world with an estimated proven and probable gas reserves of 201Trillion cubic feet (Tcf) and an upside potential of about of 600Tcf.
“In terms of gas production and utilization, Nigeria averages about 8.4bscfd. While only 18% of the production is consumed in the domestic market (Power, Industries and WAGP), 43% is exported as LNG, 32% is re-injected for enhanced oil recovery and other operational uses like fuel gas while 7% of total gas production is currently being flared”, he said.
The GMD stressed that the reserve figures by themselves did not mean anything unless investment in their development and production was driven in a sustainable and collaborative manner.
According to him, to encourage the existing players in the industry, particularly the traditional Joint Venture partners, NNPC undertook to settle all outstanding cash call arrears amounting to $5billion in 2016.
“Till date, we have defrayed over $2billion. All these efforts are geared towards sustaining investment and renewing investor confidence”, he stated.
Dr. Baru noted that in the last three years, the NNPC had been very active in the capital market assessing financing for different projects in order to sustain industry momentum, adding that the strategy was also used as a lever to promote collaboration.
“Over the past years, through systematic process, we have incrementally opened new areas to indigenous players. For some, it has provided the opportunity to collaborate with international or established industry players,” Baru informed.
He stated that between 2015 and 2017, the state oil corporation was involved in various project financing of over $3billion in new investment.
He listed some of the projects to include: the $1.2billion multi-year drilling financing package from 2015 to 2018 for 23 onshore and 13 offshore wells on OMLs 49, 90 and 95 under the NNPC/Chevron JV christened Project Cheetah; NNPC/SPDC JV ($1Billion) code named Project Santolina; NNPC/CNL JV ($780Million) code named Project Falcon; and NNPC/First E&P JV and Schlumberger ($700Million).
Baru stated that this year, the Corporation had significantly progressed new third-party financings for the NNPC/SPDC JV and NNPC/MPNU JV with both transactions substantially over-subscribed.
“NNPC/SPDC Santolina III Project has an estimated cost of about $500million and NNPC/MPN Satellite Field Development II Project has an estimated cost of $1.3billion (NNPC to raise circa $700 Million in third party financing). Furthermore, we have initiated third party financing for the NNPC/NAOC Okpai II Independent Power Plant (IPP) project with estimated cost of circa $658.42million and the NNPC/TEPNG Ikike development project with estimated cost of circa $473.4million to be funded through prepayment for gas by NLNG,” Baru enthused.
He revealed that the NNPC has successfully initialed the Memorandum of Understanding (Framework Agreement) between NNPC and NLNG for the provision of circa $2.5 Billion funding for NNPC’s portion of Cash Call payable on Upstream Gas Supply Projects for Shell Petroleum Development Company (SPDC), Total Exploration and Production Nigeria (TEPNG) and Nigeria Agip Oil Company (NAOC) Joint Ventures.
“We have, also, initiated negotiations for the Financing and Technical Services Agreements (FTSAs) for identified NPDC Assets – OMLs 13, 65 and 111. As you may be aware, NPDC currently contributes about 8% of current national daily production. Further developments from these assets and NPDC JV assets is expected to move NPDC to over 300bopd equity,” the NNPC helmsman quipped.
He maintained that the NNPC has progressed negotiations with Engineering, Procurement and Construction Contractors and potential Chinese lenders on the third-party financing for the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline Project of $2.89 Billion.
On the Frontier Basins, Baru submitted that exploratory activities progressed from seismic data acquisition, processing and interpretation to the drilling of the Kolmani River -2 well in the Benue Trough with the findings in the Kolmani River -1 by SNEPCO being confirmed and a lot more interesting information being revealed by the well as it approaches total depth of 14,250ft.
He emphasized that promoting investment requires stability in regulatory framework, clarity in terms of fiscal direction and reforms, access to capital and more importantly effective and efficient deployment of both capital and human resources.
Baru assured that Nigeria offers and would continue to offer portfolio of promising, high-value projects with healthy returns.
He observed that at the NNPC, the Corporation has since recognized the challenge as well as the opportunities oil demand growth has presented particularly as a crude oil exporter experiencing a surge in local demand for petroleum products requiring a paradigm shift in business model in order to attract capital and sustain flow of investment.
Earlier in her welcome address, the Vice President of CWC Africa, organizers of the Conference, Wemimo Oyelana, said the conference aims to stimulate discussion around strategies that promote collaboration and draw investment into the country’s hydrocarbon industry.
It is an honour and privilege for me to be invited to present a keynote address to this illustrious gathering on the occasion of the 18th edition of the “Nigeria Oil and Gas Conference and Exhibition” 2019.
This annual event plays a critical role in highlighting and promoting Africa’s huge oil and gas resource potentials to the world. NOG provides the platform that brings together stakeholders in both public and private sectors, captains of industry, professionals, key decision makers and influencers with strategic knowledge of the oil and gas value chain. This provides an avenue to meet, share knowledge, exchange ideas, gain insight, discuss emerging industry issues and proffer solutions. Lessons learnt from this gathering are applicable in the operating environment.
The theme of this year’s conference, “Driving Nigeria’s Oil and Gas Industry Towards Sustained Economic Development and Growth”, reflects the need for the Nigerian oil and gas industry to remain efficient and innovative in reacting to the emergence of cheaper renewable energy resources and sustain the relevance of hydrocarbon resources to the global energy mix.
The Nigeria Oil and Gas Conference has indeed provided a pedestal for the exchange of ideas through the vast human capital resource it provides and high-end perspectives from experts and professionals to propel Nigeria’s oil industry to the next level. The contribution from this unique gathering over the years, has increased our confidence in the successful operation of the sector.
The Nigerian Government in alignment with its transparency initiative, the Executive Order 001- Ease of doing business and the “7 Big wins” policy by Mr. President, reiterates the importance of reducing approval cycle, entry barriers and regulatory transaction costs as necessary ingredients for creating conducive business environment, optimize government take from hydrocarbon resources and value creation to all stakeholders.
It is in realization of these critical deliverables, that a wholistic automation process, through information technology and infrastructure deployment to enhance global competitiveness of the Nigerian oil and gas industry were put in place by the Government.
We are working to reduce barriers to entry, reduce regulatory transaction cost and enhance collaborative endeavours required to create value.
Similarity, we have commenced the processes of optimizing the robustness of the regulatory framework for the development and growth of the midstream as an enabler of incremental GDP contribution from the oil and gas industry. To this end, we are focusing on petrochemicals, refining and infrastructure to support gas for power and manufacturing. We are also working to incentivize deep play exploration to enhance our reserves growth. We will continue to automate our processes and drive efficiency gains.
Distinguished Ladies and Gentlemen, I bring you warm greetings and felicitations and wish us all very fruitful deliberations.