Mallam Mele Kolo Kyari, GMD NNPC
…Asia and Africa population will increase energy consumption beyond renewable energy sources can meet by 2050.
Speaking at the opening ceremony of the Nigeria Annual International Conference & Exhibition (NAICE), organised by Society of Petroleum Engineers (SPE), Group Managing Director (GMD), of Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kolo Kyari, told participants of the conference that the theme “The Future of Energy, A Trilogy of Climate Change, Public Health & Global Oil Market” has captured the realities that operators and business leaders have found themselves in the energy industry. Human activities have significantly interfered with natural systems throughout history.
“Today’s world, as we all know, is faced with Global warming & extreme whether events due to human activities associated with carbon emissions; triggering an accelerated transition to cleaner energy in order to limit global temperature rise to 1.5 °C by 2050.
Although the world is yet to reach consensus on the focus of Energy Transition, we are seeing new investment patterns toward low-carbon energy sources and technologies, such as wind, solar, hydrogen, Natural gas and bio-fuels, with obvious wider business implication on the oil and gas industry.”
The GMD said the global oil industry has experienced many challenges in the past, the most recent of which is COVID-19 Pandemic, which locked down the whole world, suppressed global economic growth and brought the oil industry to its knees.
“Today countries are gradually overcoming the pandemic shocks, economies are being re-open again, oil demand is rising and prices have gone up to pre-pandemic levels, averaging $74/bbl. we are seeing an increase in rig counts across major oil production territories.”
However, the imperatives of energy transition and the influence of active investors are changing global energy investment appetite, making oil and gas companies diversify their portfolio to low-carbon investments. Industry conversations are dominated by the shift to renewable energy as a source of cleaner and climate friendly fuel.
As an oil dependent economy, the global transition to non-fossil sources of energy will mean declining revenue, foreign exchange and funding of projects particularly in the context of Green Finance and Activist Investor’s action on the Boards of Major Oil Companies and Global Financial Institutions.
Notwithstanding, looking at both climate and population change dynamics, anticipated economic growth and rising global population especially in Asia and Africa will obviously increase energy consumption beyond what renewable energy sources can meet by 2050.
Building on this convergence, Nigeria as a key player in global energy security is addressing its challenges mainly fiscal, security and cost competitiveness to stimulate investments in the oil and gas industry.
Kyari stated further that NNPC as national oil company is leading multiple initiatives to address various issues.
“As we celebrate the passage of the PIB, we have moved our focus to improving security architecture through collaboration with major stakeholders. NUCOP is working with Operators and Service Contractors to challenge cost of operations and increase profitability and growth in the Nigerian oil and gas sector.
On the other side, we are seeing a wave of divestment by Oil Majors operating Nigeria. NNPC as a National Oil Company cannot stop partners from divesting their interest, even though it creates challenge for us in ensuring that we get right and competent investors to take position and add value to the assets.”
The GMD said NNPC will ensure that Nigeria’s National strategic interest is safeguarded, by developing a comprehensive divestment policy that will provide clear guidelines and criteria for divestment of partner’s interest.
Going forward, NNPC will make clear distinctions between divestment of shares and Operatorship Agreements under various Joint Operating Agreements, while leverage its rights of pre-emption as well as evaluating the operational competency and track records of new partners.
Kyari revealed that to ensure the corporation sustain a prosperous business environment, it will pay particular attention to the following:
***Abandonment and relinquishment costs
***Severance of operator staff
***Third party contract liabilities
***Competency of the buyer
Post purchased technical, operational, and financial capabilities especially in the era of Activist investor’s sentiment against funding of fossil fuel projects.
Alignment with Nigeria national strategic interest.
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. Nigeria’s tremendous natural gas reserve has become its greatest enabler to smooth transition to low-carbon energy.
“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 energy company of global excellence. NNPC is currently extending natural gas infrastructure backbone through the OB3 and AKK gas pipelines to deepen domestic gas utilization, support industrial growth and job creation.”
Therefore, the goal of NNPC is to take the right quantities of gas to every part of Nigeria at the right quality and the right price.
NNPC is leveraging technology to achieve better systems and processes optimization to support performance, accountability and value creation that exceeds the simple fulfilment of our business mandates.
As a national oil company, we remained committed to working with stakeholders to maintain firm position in today’s and future energy industry.
I am wishing you fruitful deliberation and look forward to reading the communique from this important event.