The Nigerian National PetroleumCorporation (NNPC) has struck $26.9billion deals in the upstream segment, showing investors’renewed confidence in the oil industry, its Group Managing Director, Dr. Maikanti Baru, has said.
Baru spoke as special guest of honour at the Nigeria Oil Industry Award Dinner and Cocktail gala night organised by the Petroleum Technology Association of Nigeria (PETAN) at the Offshore Technology Conference (OTC) in Houston, Texas, United States.
The NNPC chief said: “In spite of the delay in the passage of the Petroleum Industry Bill, there is a renewed confidence in investing in the oil and gas industry. Each time we go out to raise finance, the appetite is quite good. We have already signed four financing deals on upstream development in support of our cash call exit. We are also closing some financing deals on forward sales of Federation and NPDC crude oil. In the area of contractor financing, the AKK projects has also been awarded. In total, we have raised $3.6billion (for projects Chetah, Santolina, Falcon and the Schlumberger/First E&P FSA), we are raising $5.5billion from crude forward sales and $2.8billion for AKK projects. Just last week, Shell announced an investment inflow of $15billion in gas and deep offshore developments.”
This brings the total investment inflow to $26.9 billion. This is a demonstration of the confidence investors have on the sector, Baru added.
He continued: “I had the opportunity to present a paper at the PETAN Special Panel Discussion on ‘Nigeria’s gas flare commercialisation, prospects and opportunities’. In that session, I succinctly stated that Nigeria has the potential to be in the same league as Iran, Qatar, and Russia with the enormous gas potential of up to 600 trillion cubic feet (Tcf) of gas that we possess.
“In Nigeria, gas supply to the domestic market has tripled from 500 million standard cubic feet per day (mmscf/d) in 2010 to about 1500mmscf/d. In addition, we have embarked on the most aggressive expansion of the gas infrastructure network. We have completed and commissioned almost 600km of new gas pipelines thereby connecting all existing power plants to permanent gas supply pipeline.
“We signed the contracts to kick off the 614Km Ajaokuta-Abuja-Kaduna-Kano (AKK) pipeline project. The AKK pipeline at completion will deliver gas to the ongoing Abuja, Kaduna and Kano Power Plants and also revive the manufacturing industries in the Northern part of the nation.
“In terms of refining and production of local petroleum products, we have faced the challenge head-on and we are fully committed to the Ministerial directive of ending the importation of petroleum products before the end of 2019. We are in talks with the original builders of the refineries to return them to at least 90 percent capacity utilization before the 2019 deadline. The expectation is for Nigeria to transform from being a net exporter of crude oil to being a net exporter of petroleum products.’’
From a policy perspective, Baru said there were ongoing reforms in the industry in the mold of the Petroleum Industry Bill (PIB). The PIB been split into four parts by the National Assembly as follows – the Petroleum Industry Governance Bill (PIGB), the Host Communities, Fiscal Reforms and the Administration Bill. While the Governance Bill has been passed, the other three are at different levels of review.
“Nonetheless, we have assurances from our National Assembly that by early Q3, 2018 there would be light at the end of the tunnel. Its passage is so important to help unlock billions of dollars of investments, which has been held up due to the uncertainty of its passage. Permit me to use this opportunity to commend our legislature for their commitment to deliver on this very important national assignment.”