Nigerian National Petroleum Corporation, NNPC, would raise funds from the capital market to finance a minimum of seven new oil and gas projects in the country.
In his keynote address at the ongoing Nigerian Oil and Gas Conference and Exhibition in Abuja, entitled ‘Driving Nigeria’s Oil & Gas Industry towards Sustained Economic Development and Growth,’ Mr. Maikanti Baru, Group Managing Director of NNPC, listed the projects as NNPC/Nigeria Agip Oil Company Joint Venture Idu-Re-development and South Gas Project.
Others include the North Gas Project, Central Gas Project, NNPC/Total Exploration and Production Nigeria JV’s Ikike Project, NNPC/Shell Petroleum Development Company JV Southern Swamp and Associated Gas Solution Step 2 Project.
Baru further stated that the NNPC was on the verge of concluding the Bonga South West/Aparo, BSWA, project with Shell Nigeria Exploration and Production Company, SNEPCO, pending the resolution of certain disputes with its partners.
He said, “We intend to sanction the multibillion US dollars Bonga South West/Aparo (BSWA) project as soon as we conclude an agreement on the Heads of Terms with SNEPCO on the various pending PSC Arbitration disputes. This will jump start the resolution of all the other PSC Arbitration Disputes.”
To increase crude reserves to 40bn, hike output to 3mbpd
Baru added that the NNPC was looking at increasing Nigeria’s crude oil reserves by one billion barrels annually, growing the country’s reserves base from 37 billion barrels to 40 billion barrels within the next three years.
“The outlook for 2018 and beyond is to increase crude oil reserves by one billion barrels Year-on-Year from the current 37 billion barrels to 40 billion barrels by 2020 and also increase national oil daily production to three million barrels per day,” he noted.
On the challenges confronting the sector, Baru stated, “We recognised the challenges, as well as the opportunities oil demand growth presented us, particularly as a major exporter experiencing a surge in local demand for petroleum products.
“The balance of these objectives required that we undertook a paradigm shift in our business model to ensure we attract capital and sustain the flow of investment outside traditional government funding.
“We adopted a synergetic and collaborative approach to doing business going forward such as emplacing cost reduction and cost-saving measures to ensure that we stay profitable and in business, reduction of contracting cycle-times, resource pooling, facility-sharing for clustered assets as well as standardisation of the operating framework.
“On the expansion of our existing 22 metric tonnes per annum (MTPA) NLNG plant, we are on the verge of taking Final Investment Decision (FID) this year for additional eight MTPA NLNG Train 7 plant.”
Meanwhile, the Federal Government would henceforth approve projects in the petroleum industry based on the cost of producing oil and gas from such projects.
Speaking at the on-going Nigerian Oil and Gas Conference and Exhibition in Abuja, Mr. Ibe Kachikwu, minister of State for Petroleum Resources also stated that the Federal Government was keen on ensuring that the country’s refineries are functioning.
He stated that efforts had been made to reduce the cost of production of crude oil from about $32 per barrel to $23 per barrel, noting, however, that efforts were on to further ensure the cost are brought down to below $15 per barrel.
The minister further noted that efforts to bring down cost of production should not be by the government or through policies, but should be driven by the private sector.
Kachikwu said, “The ministry is going to be coming up with a bench mark to analyse and compare companies who do business on Nigeria and what cost of production they are running. This is because any unbelievable cost of production, basically impacts on the revenue stream of the country.
“We need to start finding out what companies who were awarded recognition are doing and why are the others not going in that direction. However, the excuses of the environment been different or absent infrastructures can no longer hold water, because there are a lot of countries with peculiar situation as ours that are producing oil at relatively lower level.
“One of the mandates that I am giving the Department of Petroleum Resources, DPR, is that as we begin to look at new projects, the cost at which we are going to produce that oil is going to become critical to our ability to approve those projects for you. So it is becoming a major front burner item.”
Kachikwu further stated that henceforth, oil companies must take the initiative to ensure stability in their area of operations.
He said, “Yes, government needs to provide security, policies. But it is absolutely important that you cannot continue to drill for oil when there is a host community’s crisis. We have seen that in Ogoni land.
”It is important that for every area that you are active, you must begin to ask yourself what more can you do more than what the law said you should do.
“It is not an issue of meeting compliance as it doesn’t take away crisis but an issue of what is seen in an operating environment. And I do understand that the burden imposed on oil companies can be huge, but it is what it is.
“Also, we need to, over the next few months, begin to work together to set up what are globally enforceable Memorandum of Understanding, MoU, that we can see around oil producing areas and what more we can do, and if government needs to be part of it, so be it. But we cannot get into the circle of coming out and then after one year, going back into the hole.”
Mr. Mohammad Barkindo, the Secretary-General of the Organisation of Petroleum Exporting Countries, OPEC, declared that both low and high crude oil prices have negative consequences for both oil producing countries and consumers.
Speaking at the on-going Nigerian Oil and Gas Conference and Exhibition in Abuja, Barkindo stated that extreme volatility in the crude oil market had very negative consequences for such consumers and producers.
He said, “Low oil prices are bad for producers today and create situations that are bad for consumers tomorrow. And high oil prices are bad for consumers today and lead to situations that are bad for producers tomorrow.”
Barkindo noted that volatility was a devastating disincentive for investment, which is the lifeblood of the petroleum industry and which is also essential for ensuring adequate supply in the future.
He explained that from 2014 to 2016, during the last industry downturn, world oil supply growth outpaced that of oil demand, with world oil supply growing by 5.8 million barrels per day, while world oil demand increased by 4.3 million barrels per day.
According to him, what was particularly ominous for consumers was the fact that investments were choked-off, with exploration and production spending falling by an enormous 25 per cent in both 2015 and 2016.
He stated that nearly one trillion dollars in investments were frozen or discontinued, while thousands of high quality jobs were lost.