NNPCL Reorganization: No Amount Of Blackmail Will Deter Kyari

By Adewole Kehinde

 “Things never happen on accident. They happen because you have a vision, you have a commitment, you have a dream”.Oscar de la Renta

It is so ridiculous for someone who lacks knowledge of the oil industry to say “As of today, the oil industry in Nigeria is on life support and will die in short order if urgent steps are not taken effective immediately to alter course”.

There are so many individuals and groups being recruited and fully funded to blackmail the Group Chief Executive Officer of the NNPC Limited, Mal Mele Kyari.

When I go through the flimsy excuses these people and organizations sponsored to blackmail Mal Mele Kyari, my mind goes back to the article I wrote on September 7, 2023, titled “MELE KYARI: A SWIFT PERFORMER.” I will reproduce the part below:

“There was a problem for years between NNPC and Indorama; I stepped in when it came to my attention. I gave them 21 days to sought the issues. Before 21 days, Mele Kyari came to my office to say we had solved the problems. Thank you, Mele Kyari… President Tinubu

“With the following statement from President Bola Tinubu, the President has recognized Mele Kyari’s capacity, implying that he has what it takes to properly unleash Nigeria’s vast investment potential in the oil and gas sector.

“Kyari, as an insider, understood well the workings of the NNPC Limited system as well as the oil and gas industry in Nigeria.

“Kyari hit the ground running within days of his appointment. The performance of NNPC Limited under his leadership has been impressive, to say the least. Under him, situations and circumstances that in the past had appeared insurmountable were turned around.

“One of these challenges is the reference President Tinubu made at the Nigeria-India Presidential Roundtable and Business Conference, which earned Mele Kyari the Presidential “Thank You.”

“If Mele Kyari had not handled the crisis between NNPC Limited and Indorama Petrochemicals Limited very well, the new $8 billion pledged towards the expansion of Indorama Petrochemicals Limited’s fertilizer production and petrochemical facility in Eleme, Rivers State, wouldn’t have come to reality.

“Aside from Indorama Petrochemicals Limited, Kyari has also led the NNPCL to resolve age-old disputes with its other business partners, notably the International Oil Companies (IOCs). This is part of its efforts at boosting Nigeria’s crude production and unlocking investments in the deepwater space in the aftermath of the coming into being of the Petroleum Industry Act”.

When Kyari was appointed Group Managing Director of the now-defunct Nigerian National Petroleum Corporation (NNPC) on July 7, 2019, the organization was on the verge of collapse. Numerous difficulties were present, including severe oil pipeline vandalism, corruption, persistent oil theft, low production levels, and a lack of openness.

For instance, a 2010 joint analysis by Transparency International and Revenue Watch Institute discovered that, out of 44 national and international energy corporations reviewed, NNPC had the worst transparency record. These situations placed Kyari in a bind.

The appointment of Kyari, which was a game-changer, was made with the obvious goal of reviving the struggling firm and making it plain that the corporation’s dubious governance tales of the past are no more.

The mess needed to be cleaned up, but Kyari was prepared, came in with his sleeves pulled up, and delivered as expected.

Under the now-defunct NNPC, Kyari displayed a fundamental understanding of what fossil energy implies and the necessity of good governance of the massive national oil business. His vision was unabashedly founded on the principle of Transparency, Accountability, Performance, and Excellence (TAPE).

For the first time in 43 years, the Kyari-led NNPC released the 2018 Audited Financial Statements in June 2020, followed by the 2019 This action won praise from the general public for the organisation.

For the first time in 44 years, the NNPC announced a N287 billion Profit After Tax (PAT) for 2020 in August 2021. As a result of Kyari’s magic wand, the company’s losses decreased from N803 billion in 2018 to N1.7 billion in 2019, and a net profit was eventually declared in 2020. The corporation’s profit increased to N674 billion by the end of the company’s fiscal year 2021. Up until this point, the NNPC has been a losing organization with a reputation for irregularities, excessive political involvement, and burdensome nuances.

Despite the many obstacles, Kyari increased its production to an impressive level. The NNPC was producing 1.6 million barrels per day of crude oil and condensate as of February 2023.

Under the now-retired NNPC, Kyari made several accomplishments.

I am happy that a public affairs analyst and journalist, Tajudeen Suleiman, set the record straight, which I will reproduce here for clarification purposes.

“Kyari did not inherit a production baseline of 2.4 million barrels per day. According to a 2020 report of the Nigeria Extractive Industries Transparency Initiative (NEITI), the total crude oil production in Nigeria in 2019, when Kyari was appointed GMD, was 735.24 million barrels. This represents an average of 2 million barrels per day.

“But in 2020, when Kyari was barely six months in office, Nigeria was able to record 2.33 million barrels per day in January 2020. However, by February 2020, COVID-19 had descended on the world and crippled oil production globally, leading to the OPEC curtailment of Nigeria’s production to less than 1.5 million barrels per day. But Nigeria still recorded a total of 646.79 million barrels in 2020, which represents a daily average of 1.7 million barrels, which was above the OPEC-capped production figure. For those who are familiar with crude oil production, shut-in production to comply with the OPEC quota creates a significant distortion and consequential challenge to the production ramp-up post-restriction cap. Nigerians cannot forget in a hurry the leadership offered by Kyari and his team, which provided institutional support for the fight against the pandemic while ensuring that production was kept stable.

“Under Kyari’s sterling leadership, over N21bn was raised by the oil industry to support the fight against the spread of COVID-19 in Nigeria. Funds were deployed for the provision of logistics and in-patient support equipment such as ambulances, ventilators, isolation centers, etc. The donation of medical consumables, which included drugs, sanitizers, masks, protective gear, equipment, and others, was made to all the states of the federation.

“It is important to note that 2020 was the lowest production figure for Nigeria compared to the previous years when Nigeria was able to build production momentum through the protection of oil assets. Former president Goodluck Jonathan had contracted a former Niger Delta militant, Chief Government Ekpemupolo, popularly known as Tompolo, to protect oil pipelines from crude oil theft and vandalism. It was a multi-million-dollar pipeline surveillance contract that drastically reduced oil theft and led to increased market production.

“It is noteworthy that oil theft recorded an unprecedented figure of 101.05 million barrels in 2016, a year into former President Muhammadu Buhari’s first tenure, due to the cancellation of the pipeline surveillance contract with Tompolo. For the first four years of the Buhari administration, oil theft went to an uncontrollable proportion. Production declined to less than 800 kbps due to the combined effects of theft and shut-ins.

“OPEC recently revealed that due to oil theft, Nigeria has consistently been unable to meet its daily production quota, which it said hovered between 1.7 million and 2 million barrels per day (mbpd).

“So, it is clear that oil theft is hurting Nigeria’s oil industry and is robbing the country of huge amounts in foreign exchange earnings. But when Kyari came in as GMD in 2019, he instituted a multi-security control room manned by the NNPC. All assets of the company were linked in real-time to the command-and-control center. The Centre was responsible for monitoring, locating, and reporting suspicious activities to various security agencies for intervention. The effort led to oil production recovering to 1.6 million barrels per day at the close of 2022.

“But after seeing the damages oil theft continued to wreck on the country’s earnings, Kyari pushed the Buhari administration to re-introduce private security arrangements, which eventually led to the revalidation of Tompolo’s pipeline surveillance contract. Since then, oil production has continued to stabilize and has seen a steady increase.

“Kyari came at a time when disputes, aside from oil theft and pipeline vandalism, were paralyzing oil production. But within a few months of stepping into office, Kyari was able to resolve them. These include the dispute between Shell and Belema Oil that shut in over 30,000 barrels per day of production in OML 25, and over agreements with SNEPCo and other PSC partners to resolve the disputes around another deep offshore block, OML 118, leading to the renewal of that acreage with the prospect of a new $10 billion investment in the development of the Bonga South-East Field.

“Among the resolutions was the execution of the Abo OML 125 Heads of Terms, leading to the resolution of the issues around most of the deep offshore production sharing contracts. This paved the way for the renewal of OML 125 and further investment.

“There was also the successful resolution of the 1993 PSC dispute, which holds over 90% of Nigeria’s deepwater production, paving the way for unlocking over 7 billion barrels of oil, 20Tcf of gas reserves, and potential investment of up to US$40 billion over the next five (5) years, while at the same time relieving NNPC of almost US$10 billion in contingent liabilities.

“He also achieved the commercial discovery of hydrocarbons in the Gongola basin of the Upper Benue trough and attained the presidential flag off of the Kolmani Integrated Development Project (KIPRO) on November 22, 2022, with over 1 billion barrels of oil and 500 billion metric tonnes of gas addition to existing hydrocarbon reserves, which will go a long way to enhance national energy security, create job opportunities, and stimulate balanced economic growth.

“As part of the strategic drive to shore up national reserves, Kyari expanded hydrocarbon exploration campaigns to the Sokoto and Bidda basins and achieved a spud-in for the ongoing exploration projects in the Nasarawa and Chad Basins.

“Within this year alone, Kyari achieved first oil in OML 13, restored production in OMLs 11 and 18, and is currently working to achieve first oil in OMLs 83 and 85, among others. Kyari is also taking major initiatives that will move towards achieving FID for major projects in the deepwater and frontier basins such as the Bonga Southwest Apraro, Bonga North, Prowei, KIPRO, Owowo, Bosi, and so on.

“In terms of investments in infrastructure expansion, it’s hardly an exaggeration to say no GMD has done as much as Kyari within the short time he has been in office. Many significant investments have been made that have turned around the industry.

“He wrapped up the Final Investment Decision on the NLNG Train 7 Project in December 2019. The project is expected to generate over $20 billion of revenue for the government over the project’s lifecycle, including 10,000 direct and 40,000 indirect jobs.

“Under Kyari’s leadership, NNPC, as the largest shareholder of NLNG, enabled the Engineering, Procurement, and Construction (EPC) contract of the NLNG Train-7 project with the SCD JV Consortium, comprising affiliates of Saipem, Chiyoda, and Daewoo. The execution of the EPC contract signals the effective commencement of the detailed design and construction phase of the multi-billion-dollar project, which, on completion, is expected to raise the NLNG production capacity by 35 percent from the current 22 million metric tonnes per annum (MTPA) to 30 MTPA.

“He also flagged off the construction of the Ajaokuta-Kaduna-Kano (AKK) gas pipeline project on June 30, 2020. The project, an integral part of the Trans-Nigeria Gas Pipeline (TNGP) with a capacity to transport about 2.2 billion cubic feet of gas per day, has been described as a game-changer.

“To address domestic gas challenges, the NNPC GMD commissioned the Oredo Integrated Gas Handling Facility (IGHF) and the Liquefied Petroleum Gas Storage and Dispensing Unit. The facilities are wholly owned and constructed by the Nigerian Petroleum Development Company (NPDC) and currently deliver over 200 million standard cubic feet of dry gas per day and 330 metric tonnes of Liquefied Petroleum Gas (cooking gas) which is equivalent to 16 units of 20tonnes LPG trucks per day into the domestic market.

“Other landmark achievements of the NNPC under Kyari include the execution of a JV agreement with NIPCO to market and distribute CNG and a Final Investment Decision (FID) on the Brass Gas Hub with the Brass Fertiliser and Petrochemical Company for the $3.6 billion Brass Methanol Plant in Odioma, Bayelsa State.

“A project to deliver 300 million standard cubic feet of gas per day and 1,200 megawatts of electricity to the domestic market was achieved with the signing of a $260 million financing agreement for the Assa-North Ohaji South (ANOH) Gas Project with Seplat.

“To boost gas production, NNPC, under the leadership of Kyari, also executed a Gas Development Agreement (GDA) for the Oil Mining Lease (OML) 143 with its partner, Sterling Oil Exploration and Production Company (SEEPCO). The project will boost the nation’s gas production by 1.2 trillion cubic feet (tcf).

“The NNPC also secured the United States Trade and Development Agency (USTDA) Grant, commenced the upgrade of the 1350 MW Abuja IPP project development to World Bank Standard for bankability, and signed the Trans-Atlantic Pipeline Project (Nigerian Morrocco Gas Pipeline) MOU with African NOCs, with ONHYM and ECOWAS.

“Under his able leadership, NNPC has succeeded in keeping the nation wet with petroleum products through an efficient supply framework while working to restore downstream infrastructure through the emplacement of the Build, Operate, and Transfer (BOT) model for the depots and pipeline network.

“He also achieved the execution of an agreement with the Nigerian Content Development and Monitoring Board (NCDMB) and Zed Energy for the construction of the N10.5 billion Brass Petroleum Products Terminal. The facility will serve as a strategic reserve for the country, as it is expected to provide a depot for 50 million liters of petroleum products, a two-way product jetty, automated storage, and an automated bay for AGO, PMS, DPK, and ATK. It will close the infrastructure gap in the distribution of petroleum products and also help to stop illegal refining activities.

“To deepen gas commercial, Kyari-led NNPC achieved expansion of the LPG logistics business via the joint venture company WAGL acquisition of two LPG vessels: MT Sapet and MT BaruMK.

“As typical with visionaries, NNPC, under Kyari’s leadership, acquired OVH, adding over 380 retail stations to the existing retail network, a 240,000MT capacity per annum jetty, 3 Lubes blending plants, 3 aviation depots, 8 LPG plants, 38 LPG skids, and 12 warehouses, which positioned NNPC Retail as the single largest downstream network in Africa.

“As part of Kyari’s commitment to make Nigeria a net exporter of petroleum products, on April 6, 2021, NNPC signed the $1.5 billion Engineering, Procurement, & Construction (EPC) Contract Agreement with Tecnimont SpA, for the complete rehabilitation of Port Harcourt Refinery, which will be managed through a structure operations and maintenance model.

“He also achieved the WRPC and KRPC Quick Fix contracts awarded to Daewoo for the restreaming of both plants by 2024.

“He also took a strategic investment decision through equity investment in Dangote Refinery, Azikel Refinery, and three units of 10kbpd condensate refineries.

“If Kyari’s leadership of the industry had been as ineffective and uninspiring as the letter writer wants the president to believe, how could he have succeeded in accomplishing some of his achievements highlighted above? If NNPC partners had lost confidence in the leadership of the corporation, as he stated, how could he have achieved the above?

“When Kyari was appointed GMD in August of 2019, it generated excitement and optimism in the industry due to his track record of transparency and industry experience. Stakeholders hailed his appointment as that of a round peg in a round hole. Four years later, Kyari did not disappoint. No scandal has been linked to him since he came on board, and he has continued to demonstrate leadership in an industry beset by challenges.

For those who think they can blackmail Kyari and put him on a bad record with President Tinubu, I want to remind them that Kyari keeps getting commendations from the President, as can be confirmed when President Tinubu praised the Gwagwalada Independent Power Plant project’s efforts by the NNPC Ltd., under Mal Mele Kyari and its partners.

The three-year project must be completed on schedule and within budget, and he charged the team with making sure.

He explained that the groundbreaking was very important to the country since it represented the first audacious step in his administration’s initiative to build a robust and vibrant energy sector and provide uninterruptible power to all Nigerians.

One could continue by highlighting the extraordinary changes Kyari’s leadership has brought to Nigeria’s oil and gas industry—successes that the president seemed to be aware of and are likely the reason for his apparent trust in Kyari’s leadership of the NNPCL.

 

Adewole Kehinde is the publisher of Swift Reporters and can be reached via 08166240846, e-mail: kennyadewole@gmail.com