The Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mr Mele Kolo Kyari has said that Nigeria is providing major trunk line infrastructure as part of its aggressive gas utilisation policy to meet the county’s need in gas.
The GMD stated this when he paid a courtesy visit to the Director-General of Voice of Nigeria (VON), Mr Osita Okechukwu, at VON corporate head office in Abuja.
According to Mr Kyari, several projects that are critical to the delivery of gas hitherto delayed are now being completed.
“We have several projects spanning 10 years. Many of them were hugely delayed for various reasons, sometimes for financial constraints that government faces over time, and also sometimes probably out of a sheer lack of will to deliver on those projects, and there are a number of them.
“There’s a major trunk Nigeria gas pipeline spanning all the way from the east, specifically from around Port Harcourt, all the way across the country into Abuja, all the way to Kano.
“ Then also you have another line that links the east to the west, through what we call the Escravos – Lagos pipeline fragment, and then the OB – OB 3 pipeline.
“The connection of these three means that you can take gas from anywhere in the country, and also deliver to the key consumption points.” The GMD said.
“most people are not aware that DPR also regulates the activities of NNPC” – Malam Mele Kyari, GMD NNPC pic.twitter.com/rbIudxjApA
— VOICE OF NIGERIA (@voiceofnigeria) December 29, 2020
The GMD gave assurances that by mid-February 2021 there will be sufficient gas for domestic consumption with the completion of some of the infrastructural projects.
“More importantly, there’s what we call the OB-3 Gas River Crossing. That’s a pipeline that is supposed to cross the river Niger to join the OB-3 network and that also has been hanging for a long time.
“We have also put the process by end of January or latest by mid of February, we would have achieved this. What that will mean is that gas will be waiting for customers and not the other way around.
“Today customers are waiting for gas. There are a number of customers we are not able to satisfy today, including the major customer like the Dangote cement factory in Kogi state, and many other assets that we are not able to deliver full gas to because those infrastructures are not in place.” Mr Kyari added.
COVID-19 Impact
The GMD noted that the global demand for oil has been shrinking as early as late 2019 before the outbreak of the COVID-19 pandemic. He attributed this to the move away from fossil fuel to other sources of energy by countries.
According to the GMD, “What we saw happening is some form of energy transition that is happening.”
“We all know that the global economies were slowing down and the result was some decline in consumption of oil, which is a combination of the energy transition issues and the issues around recessions in many countries, even before COVID-19 came.
“So when COVID-19 came, it practically accelerated that process by cutting down production and consumption to much lower levels.” He said.
Mr Kyari said the COVID-19 pandemic and its negative impact is a disaster for the oil and gas industry which has lead to significant revenue losses.
“Investment could no longer progress. And therefore it has a very obvious impact on our country.” He said
He stated that in spite of the colossal negative effects of COVID-19 on Nigeria’s revenue stream, it also created opportunities.
“And we saw things that changed. What they call the new normal that COVID-19 has brought one of them is the fact that we now look at our cost in everything we do.
“We made so many initiatives in the oil and gas industry to cut down costs so that as you reduce costs, obviously tax revenues go up and then the revenues that are available to the state becomes more elevated.“ The GMD said.
Deregulation
Mr Kyari said Nigeria’s oil and gas sector is fully deregulated. According to him, as far as institutions of government and markets are concerned, the sector is fully deregulated.
“Deregulation means government does not pay any subsidy on the cost of petroleum, or any other commodity. So this market is completely deregulated. It means that people can go to the market, buy the product, come into our markets, and sell or even buy from NNPC and sell to the market, and then recover the cost and then a reasonable margin.” Mr Kyari said.
The GMD added that it is a transition situation noting that there is no provision for subsidy in the 2020 appropriation act and in the approved 2021 budget.
He stated that issues surrounding the inability of oil marketing companies to import petroleum products into the country bothering on foreign exchange are being resolved with the Central Bank of Nigeria and that the framework will be in place very soon.
“And once that is put in place, of course, the NNPC ‘s monopoly of the importer of last resort will vanish and therefore the markets will react to it.
“Why people are confusing it for lack of deregulation is that you always have a price cap in a market environment otherwise the ordinary people will be exploited by marketing companies. It can even be the NNPC.
“When you don’t put a cap around the market conditions, then you’ll seem to have allowed full-fledged exploitation of the ordinary people.
“There’s no country in the world that does not have some form of a bracket, a basket within which the marketing companies can do, and this is determined by the market,” he said.
The GMD also stated that Nigeria’s oil sector is strategically located to continue with its production of oil.
“So we know that the oil, we will continue to produce them. We will meet our target of 3 million barrels per day, it’s very within reach. Of course, we curtail it because of the OPEC issues. Otherwise, you know, we’ll continue in that trajectory and we would deliver.
“I don’t see any challenges with the production of oil. I only emphasize gas because we know that that’s where the value is for our country. And then the oil can give us the cash to run the rest.” The GMD said.
