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Roadmap for the future of Nigeria’s oil and gas

Jan 17, 2019
5 min read
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Henry Ikem Obih, chief operating officer, Downstream, Nigerian National Petroleum Corporation on his country’s plan to become a refining hub and its cooperation with the energy industry in Niger

 

Nigeria and the Republic of Niger recently signed a Memorandum of Understanding to construct a hydrocarbon pipeline and a petroleum refinery. How is the project progressing?

 The entire project is earmarked for completion in three to four years. I think this project is very important to the Nigerian downstream industry in a number of ways:

Firstly, it increases our refining capacity by an additional 100,000 to 150,000 barrels per day. This in turn reduces our overall cost of logistics and transportation of refined products from our major supply hubs located in the Southern part of the country providing greater ease of supply and distribution in the Northern parts of the country The additional product volume also reduces the need for product imports.

Lastly, it creates additional jobs and workforce skilling while the boost in supply will support economic growth and result in more competitive retail prices for the consumers.

 

How will this development add to Nigeria’s place in the international energy market?

Prior to this development we already initiated processes to overhaul our existing downstream infrastructure including pipelines, storage facilities, marine jetties as well as our refineries. We have also embarked on a programme that will increase storage capacity, install new distribution pipelines and rehabilitate key operating facilities.

These initiatives are part of NNPC’s 12 Business Focus Areas (or BUFAs), which is our Strategic Plan aimed at enhancing key aspects of our value chain and repositioning NNPC as a global player as we transform from a fully integrated oil and gas company to an Energy Company.

The 12 BUFAs are: Security, New Business Models, JV Cashcalls, Reserve and Production Growth, NPDC Growth, Gas Development, Oil and Gas Infrastructure, Refinery Upgrade & Expansion, Renewable Energy and Frontier Exploration, Ventures and Common Services, Professionalism and Accountability and Staff Welfare.

For our refineries, the objective has always been to expand local refining capacity and establish Nigeria as an important refining hub in the international energy market.

The MoU with the Nigerian government will contribute to the achievement of our overarching goal of transforming our nation from being petroleum-products-import dependent to one that is fully sufficient in local refining and a net exporter of petroleum products. It also supports ultimately, the positioning of Nigeria as a key refining hub in the international energy market.

 

 Business magnate Aliko Dangote has announced plans for a $14 billion refinery project. How far along is this plan?

We believe the project is going according to plan. Recent reports indicate that 95 per cent of engineering works has already been completed and 90 per cent of necessary procurements are in place. Therefore, we expect that the project will be completed as projected by year end 2020.

 

 What other projects is the country looking towards to increase its energy productivity?

NNPC is currently supporting several projects driven by private capital in Upstream, Refining, Gas, Power and Renewable Energy. 

In line with the 12 BUFAs I mentioned earlier we have various projects focused on reserve and production growth (especially for our upstream subsidiary: Nigerian Petroleum Development Company - NPDC), Gas development, Renewable Energy and Frontier Exploration. We are encouraged by the significant successes achieved with our Alternative Funding Arrangements to increase national daily production and capacity which have attracted $3.7 billion of investments from our Joint Venture partners, Shell, Chevron and First E&P. Our efforts are focused on:

  • The increase of our crude oil reserves by 1 billion barrels yearly from the 37 billion barrels to 40 billion barrels by the year 2020 as well as achieving a daily crude oil production of 3 million barrels per day. We have also intensified exploration activities across our 7 frontier basins
  • For gas development, we plan to increase availability from the current 1.5bscf/d to 5bscf/d by 2020 which will enable us to generate about 15GW of electricity and stimulate gas-based industrialisation across the country
  • These efforts will be achieved through our seven Critical Gas Development Projects which will on completion deliver about 35 Trillion Cubic Feet (TCF) of Gas. We will be showcasing these projects during the conference
  • Furthermore, we recently sanctioned a $2.8 billion 614km gas  pipeline  project from Ajaokuta-Abuja-Kaduna-Kano (AKK) to facilitate gas distribution across the country
  • We also plan to raise finance from the capital market for new oil and gas projects such as the NNPC/Agip JV: Idu-Redevelopment, South Gas Project, North Gas Project and Central Gas Project, NNPC/Total JV Ikike Project, NNPC/SPDC JV Southern Swamp and Associated Gas Solution Step 2 Project amongst a host of other new projects.

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