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NNPC Weekly Review: Stakeholders hail PIA as economic game-changer

The Nigerian National Petroleum Company Limited (NNPC) started the week with the commendation of stakeholders in the nation’s political and industrial sectors on the successful activation of the Petroleum Industry Act (PIA 2021).

 

It would be recalled that the Act was signed into law by President Muhammadu Buhari on Aug. 16, as an economic game-changer.

 

The stakeholders who include the Governor of Akwa Ibom State, Mr Udom Emmanuel, the Chief Executive Officer (CEO) of NNPC, Malam Mele Kyari, and former Managing Director of Seplat Petroleum Mr Austin Avuru, gave the commendation at the just concluded 27th Nigerian Economic Summit (NES).

 

The summit was a public-private sector dialogue organised by the Nigerian Economic Summit Group (NESG).

 

In a virtual presentation, Gov. Emmanuel applauded President Buhari’s timely assent to the PIA, saying that the law has given a sense of belonging to all stakeholders, especially the host communities.

 

The Governor who was represented by the Secretary to the State Government (SSG), Dr Emmanuel Ekuwem, said that the provisions regarding frontier exploration would help revisit the oil wells that had been capped and would improve the state’s economy.

 

On his part, the former Managing Director of Seplat Petroleum, Mr. Austin Avuru, said the PIA would change NNPC’s mode of operations as it had empowered the Company to do business according to rules rather than discretion.

 

He further noted that NNPC operating under the Company and Allied Matters Act (CAMA) would strengthen the petroleum industry.

 

In his presentation titled: “PIA 2021 Is a New Day”, the CEO of NNPC, Malam Mele Kyari, gave an overview of the structure of the new NNPC Limited as provided in the PIA.

 

Kyari who was represented by the Chief Financial Officer of the Company, Mr Umar Ajiya, said that according to the PIA, NNPC would operate under CAMA, declare dividends to its shareholders and retain 20 per cent of its profits to grow its businesses.

The PIA was enacted to provide legal, governance, regulatory and fiscal frameworks as well as provide guidelines for the development of host communities and other related matters in the upstream, midstream and downstream sectors of the Nigerian Petroleum Industry.

 

The Act is made up of five Chapters, 319 Sections, and 8 Schedules.

 

Still in the week under review, the NNPC said the country’s petroleum product demand would expectedly grow by 14.57 per cent to 17.3million metric tons by 2025 from 15.1million metric tons in 2020.

 

This projection was made by the company’s CEO, Mele Kyari, at the opening of the 15th Oil Trading and Logistics (OTL) Africa Downstream Week which took place in Lagos.

 

In a keynote address at the event, Kyari disclosed that the country required about 3.097billion dollars worth of investment in condensate refineries to meet the projected demand for petroleum products.

 

According to Kyari who was represented by the Group Executive Director, Downstream, NNPC, Engr. Adeyemi Adetunji, the NNPC requires between 1.6billion dollars and 2.7billion dollars to improve the supply and distribution of petroleum products, revamp Liquefied Petroleum Gas (LPG) infrastructure, and build Compressed Natural Gas (CNG) plants in the country.

 

Speaking on the theme of the conference “Downstream in Transition: Getting Set”, the NNPC helmsman said that the country would need a refining capacity of about 1.52million barrels per stream day (MBPSD) to meet its petrol requirement in the next four years.

 

He also projected that the demand for natural gas could grow about four times over the next decade from 4.8billion cubic feet per day (bcf/d) in 2020 to between 10 and 23bcf/d in 2030.

 

He said that the current supply to the domestic market was about 8bcf/d to power, 0.77bcf/d to industries, and 3.2bcf/d for export through the LNG and the West Africa Gas Pipeline (WAGP), while about 54bcf/d was flared.

 

According to him, the expected demand growth would come from the increase in the wheeling capacity of existing national power grid in line with the Presidential Power Initiative, major fertilizer projects (Dangote, Brass), and industrial demand for natural gas in the northern axis of the country.

 

On the global oil market outlook, Kyari said: “Some 10.4trillion dollars global stimulus in response to the COVID-19 pandemic led to the rebound in consumers’ spending while incentives for long-term investments in hydrocarbon had waned.”

Quoting the recent data by the Organisation of Petroleum Exporting Countries (OPEC), Kyari stated that hydrocarbon would continue to be relevant in the global energy mix for the next two decades.

 

He slao quoted OPEC date saying that the world oil demand is expected to rise from a pandemic stricken 90.6million barrels per day (mbpd) in 2020 to 108.2mbpd in 2045, thereby accounting for 28 per cent of global energy needs.

 

The OPEC data further stated that the rise in demand would be driven by growth in world population, which is set to expand to 9.5 billion by 2045, and the huge potential for expanding access to modern energy services for the under-served.

 

He noted that the downstream sector of Nigerian oil and gas industry had been in transition prior to the passage of the PIA.

 

This he said, was in response to the global energy transition and decarbonisation initiatives.

 

Kyari maintained that it would be difficult to discuss the transition in the downstream sub-sector in isolation from the overall evolution that is happening in the industry, adding that NNPC had diversified its portfolio over the years towards transiting to an energy company with new investments in gas, power, and renewables.

 

He said that key pipeline projects were on-going to assure delivery of gas to the demand nodes, stressing that the corporation has also progressed with the Refineries Rehabilitation Programme to enhance its participation in the Oil and Gas value chain.

 

Kyari explained that the transition in Nigeria’s oil and gas sector was being driven by the global decarbonisation efforts to switch to renewables in response to environmental concerns.

 

As investments in hydrocarbon continued to wane due to energy transition and geopolitics, Kyari said the world economy faced shortages, high energy prices, rising inflation and sluggish growth.

Meanwhile, the NNPC has revealed the cost of the 21 road it plans to rehabilitate under the Federal Government Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme in pursuant to Presidential Executive Order 007 of 2019.

 

Following the approval by the Federal Executive Council (FEC), the NNPC would construct a total of 1,804.6km of roads at a total cost of N621,237,143,897.35 (Six Hundred & Twenty-One Billion, Two Hundred & Thirty Seven Million, One Hundred & Forty Three Thousand, Eight Hundred & Ninety Seven Naira, Thirty Five Kobo).

 

The breakdown is as shown below in a statement issued by Mr Garba Deen Muhammad, Group General Manager, Group Public Affairs Division of the NNPC.

 

S/No      ZONE     KMs TO BE COVERED      COST (BILLION NAIRA)

  1. North Central 791.10   244,872,518,149.29
  2. North East 273.35   56,126,741,692.11
  3. North West 283.5     23,057,338,426.61
  4. South East 122.0     43,281,895,080.04
  5. South South 81.9        172,027,737,903.32
  6. South West 252.7     81,870,912,645.98

Total      6 Zones 1,804.6km           N621,237,143,897.35

The NNPC once again expresses its appreciations to the Federal Executive Council for its timely approval of the take-off of the project and to the Federal Inland Revenue Service (FIRS) for its support.

 

Source: News Agency of Nigeria