The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), Mele Kyari, on Tuesday disclosed that going forward, the national oil company may soon begin the divestment of some of its assets to its competitors in the oil and gas industry.
Kyari, who was speaking against the backdrop of recent accusations that the NNPC was in the habit of blocking some operators from successfully completing assets divestments, explained that if the need arises, the NNPC will exit its current Petroleum Sharing Contracts (PSC) arrangements with some operators and source for funding under Incorporated Joint Venture (IJV) arrangement.
He made the comments at the ongoing Nigerian Oil and Gas Energy (NOG) Week in Abuja, with the theme: “Powering Nigeria’s Sustainable Energy Future”.
The GCEO who reiterated that the oil firm would soon achieve its aim of going public with its planned Initial Public Offer (IPO), clarified that with the Petroleum Industry (Act), the NNPC no longer enjoys any undue advantage and would henceforth operate like other commercially-oriented companies in the sector.
According to the NNPC chief executive, because the national oil firm no longer makes the rules or gets any assistance from the government, it is now just acting as an agent of government which will always get paid for its services.
He reasoned that with the new law guiding the industry, the NNPC is now well positioned to operate as a world-class profit-driven entity that would ensure payment of taxes, royalties as well as dividends to the government and shareholders.
“I can tell you we are a competition. We are NNPC limited. We don’t create rules anymore. We are regulated. We are the competition. We will pay taxes, will pay royalties, like any one of you here; we will also pay dividend to our shareholders which includes many of you in this hall.
“So we are in business as a competition, we are private sector. Forget about the fact that we are owned today by government 100 per cent. And by the way, you are also aware that we’re doing our Initial Public Offer (IPO) very soon,” he assured.
The GCEO who delivered his keynote address on: ‘’Redefining Nigeria’s Energy Landscape for a Sustainable Energy Future’’, said that what had held NNPC back in the past wasn’t lack of trying, but the operating environment without a clear enabling fiscal and legal environment.
He reiterated the key initiatives currently in the works for to expand gas infrastructure and deliver gas across West Africa and potentially, Europe as well as the expansion of liquefaction capacity of NLNG and ramp up access to domestic gas use.
He added that strategic decisions like subsidy removal have already paved the way for positive change in the sector, while freeing up capital for powering the sustainable supply of energy.
He said: “Are we positioned to facilitate business? Yes, but our partnership produced over 80 percent of the oil and gas in the country, either directly or through our off stream company or through our partnership
“I’m in a position to facilitate business. On the PSC today, we are just agents of the state, trying to make sure we deliver value to them and then they will pay…
“I’m sure you appreciate this new relationship. The PSCs are not on the balance sheet on the NNPC. We Make sure you do your work because when you do, we are compensated 40 per cent of your profit oil, so it’s important for us as well as business for us.”
Disclosing the intention of the NNPC to sell some of its oil and gas assets to willing buyers among its competitors in the industry, Kyari explained: “We will sell part of our equity, it’s in the law, and once that happens, we will not be any different from another company. So, it will be a very different business environment,” stressing that currently its partnerships produce over 80 per cent of the oil and gas in the country.
In an audio-visual message relayed at the event, the Secretary General of the Organisation of Petroleum Exporting Countries (OPEC), Haitham Al Ghais assured Nigeria of maximum support and collaboration from the oil producers’ group.
Al Ghais said he and his team at OPEC were looking forward to working closely with President Bola Tinubu and the entire oil industry.
Stressing that fossil fuels were not disappearing soon, he reiterated that the global primary energy demand is forecast to increase by a significant 23 per cent up to 2045, stressing that that meant all forms of energy would be needed including solar, nuclear, wind, and waste to energy power.
He said the world would also require innovative solutions such as carbon capture, utilisation and storage and hydrogen projects in addition to the circular carbon economy, which has received a positive endorsement from the G 20.
Al Ghais noted that one area of great concern to him in the energy industry related to the industry’s investments, stating that the global oil sector alone would need a massive cumulative investment of $12.1 trillion throughout the year 2045.
“We are currently not on track to reaching that level. To make things worse, we have in recent years even heard calls to limit or stop funding new oil and gas projects.
“Altogether, this is of course unwise, and is an unrealistic scenario that would be particularly devastating to developing countries who rely on revenues from their precious oil and gas resources to develop their economies,” he argued.
Permanent Secretary and highest ranking official at the Ministry of Petroleum, Mr Gabriel Aduda, in his address, said the calls to stop the production of hydrocarbons was unfair to developing countries.
According to him, Africa and indeed Nigeria remain some of the least emitters of carbon worldwide and therefore should not be made to bear the brunt of the energy transition train.
Also in his comments, the Chairman of the Independent Petroleum Producers Group (IPPG), Mr. Abdulrazaq Isa, who was represented by the Executive Vice Chairman of ND Western Limited, Dr Layi Fatina, called for an expedited closure of ongoing divestments by the international oil companies (IOCs) to mitigate consequences on the industry.
Isa commended the president for his appointment of a seasoned professional and industry technocrat as a his special advisor on energy, however maintained that making ensuring progress in the sector would require a focused delivery of the key priorities.
“We need to establish a strong governance framework to guide the implementation of the PIA…close gaps where they exist, manage overlaps, concerns and conflicts to ensure overall delivery of the objectives, intent and deliverables of the reforms,” he said.
He further called for strengthening of security in Niger Delta, anchoring establishment of value-creating midstream and downstream sectors, boost competitiveness of Nigeria’s oil and gas industry, create a single regulator for the sector as well as expedite the conclusion of ongoing IOC divestments.
