By Ibrahim Buhari
33 years of experience and still counting in the oil and gas industry. Mr. Mele Kolo Kyari, the 19th Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), has taken tremendous steps and made efforts to ensure an environment conducive for teamwork, efficient communication and collaboration within and outside the oil sector in several ways.
On assumption into office, Kyari inherited an NNPC that was still struggling to shake off the negative image of a national oil company. He immediately made it top of his priorities to ensure corruption; bribery and racketeering were eliminated and no longer associated with the NNPC.
He was focused on turning the corporation into an oil giant reputed for Transparency, Accountability, Performance and Excellence. He sees his appointment as a lifetime opportunity to give the NNPC a new direction in the way, its operations and businesses are been conducted, and give Nigerians a renewed hope. Upon his inauguration, the reform-minded oil and gas industry technocrat, unfolded an agenda for NNPC’s rebirth.
He called it the Transparency, Accountability and Performance Excellence (TAPE), a five-step strategic roadmap for NNPC’s attainment of efficiency and global excellence seeing it as the only way to transform the NNPC and enhance its potential and capacity to compete with other international oil companies around the globe.
Within one year, the NNPC under Kyari and in partnership with the Minister of State for Petroleum Resources, Timipre Sylva, amicably ended a long-standing dispute which had prevented crude oil production in Akuku Toru community of Rivers State for over two years.
This singular action ensured the smooth operation of Oil Mining Lease (OML) 25 flow station and the return of about 35,000 barrels of oil production per day. Kyari ensured the execution of a funding and technical services agreement (FTSA) as well as an alternative financing deal for NPDC’s OML 13 valued at about $3.15 billion and OML 65 for $876 million. These agreements resulted to a 32% and 21% incremental production output in OMLs 40 and 30.
Mele Kyari has also save costs for the government through NNPC’s revision of joint venture and production sharing contract (PSC) operators’ unit costs, down to $19 per barrel and $18.3 per barrel, from the initial $31 per barrel and $24.3 per barrel respectively. Concerned about the impact of high oil production cost on the government revenue, Kyari has, demonstrated commitment to achieving the industry’s target of reducing oil production cost to an average of $10 per barrel by 2021.
Under Kyari’s management, NPDC acquired four new oil acreages (OMLs 11, 24, 116 and 98, while recovering debts for gas supplies totaling about N16.64 billion and $3.55 million. Kyari and the NNPC management worked effortlessly to realize the Final Investment Decision (FID) on the Train 7 of the Nigeria Liquefied Natural Gas Limited (NLNG) in November 2019.
The project according to the NLNG will generate over $20 billion revenue and over 50,000 direct and indirect jobs in the country. Also under his supervision, the construction of the Ajaokuta-Abuja-Kaduna-Kano (AKK) gas pipeline project, which had suffered delays, was officially flagged off. The AKK pipeline project is expected to be delivered in 2022.
The financing for the project was raised through Nigeria’s contribution of 15% of the total cost while a Chinese bank would provide the remaining 85%. Apart from helping the government to save over $300 million, the AKK project would also attract over $2billion of FDI. Kyari has ensured the successful execution of the intelligent pigging of the West African Gas Pipeline project as part of regulatory compliance and flow assurance, which is instrumental to achieving delivery of Nigeria-Gas foundation volume of 133 million BTU and cumulatively of more than 190 million BTU through the pipeline system.
He also ensured that thee debts valued at over N80billion and $45million owed the NNPC, through its subsidiary in charge of gas development and supply, the Nigerian Gas Company (NGC) by gas off-takers, were recovered.
Before His appointment as the GMD of NNPC, Petroleum products supply has been extremely difficult to meet up with even the local demand of Nigerians, which no one could predict when the next fuel scarcity would hit the country and send families to spend days and nights in long fuel queues at filling stations.
Kyari leveraged on the existing Direct-Sales-Direct-Purchase (DSDP) product supply arrangement he started and sustained while in office as the GGM COMD of the NNPC, to guarantee energy security for Nigerians. Unlike most of its peers around the world, Kyari said the NNPC has for too long focused its operations on a single business line – exploration and production of oil.
Despite the abundant natural gas reserve in the country, the huge volume being produced by the oil companies are only through accidental encounters in the course of oil production.
There is no deliberate policy or programme by the government to harness the gas resources to contribute to the economic development efforts of the country.
Kyari said NNPC has a plan to expand its activities beyond its traditional operations to other unexplored frontiers, to grow its revenue streams, and cushion the impact associated with the volatility in the international crude oil market.
Under His leadership, the NNPC Retail Limited launched its range of lubricants into the Nigerian products market. Apart from growing the country’s gas export potentials, Kyari said the NNPC and its partners were committed to developing the infrastructure necessary to encourage domestic utilization of gas among Nigerians as well as the generation of electricity for the country and the industries.
In 44 years of NNPC’s existence, never has its management been able to release to the general public the audited financial statements and accounts of all its strategic business units (SBUs) and Corporate Services Units (CSUs).
The best that has usually happened was the submission of limited copies of such reports in highly confidential covers for the files of some restricted government institutions, like the National Assembly. Mele Kyari did not only conclude the audit of the 2018 Financial Statements and bring up-to-date the NNPC’s books and accounts, he released to the public all audited financial statements and accounts for the year.
He makes sure there is a Timely Remittance of Oil Revenues to the Federation Accounts Allocation Committee (FAAC) for distribution to the three tiers of government. Kyari secured about $3.15billion funding for NPDC’s OML 13; $876 million for OML 65, and $3.4 billion for OML 11.
Besides, Kyari has also concluded the necessary processes for a $1.8 billion financing for the AKK pipeline project as well as executed a term sheet with the Bank of China to raise escrowed $519 million from internal cash flows to support equity funding of oil and gas industry projects in the country.
Kyari has also achieved financial closure for ‘Project Eagle’ by raising $1billion for the NPDC through a Forward Sale Agreement (FSA), while also negotiating a term sheet with AFREXIMBANK for the $1billion funding for the Port Harcourt Refinery and Petrochemical Company (PHRC) rehabilitation project.
At the peak of Covid-19 crisis in April, the NNPC achieved the highest level of crude oil production per day that has never seen in at least ten years (about 2.4million barrels per day), and this was possible with the deployment of the latest technology under NNPC’s Business Continuity Plan which was activated during the crisis period to connect with its partners’ locations to sustain operations across the business value chain, despite disruptions and slowed down economic activities all under Kyaris’ watch.
Kyari and the Minister of State for Petroleum Resources, Timipre Sylva joined OPEC to resolve programme to cut the crude oil output of its members by about 10 million barrels between May 2020 and April 2022, and these has helped in stabilizing crude oil prices and the market.
The impact on Nigeria has been a general slowdown on growth, as the NNPC has to cut on its oil production, amid reduced oil exports. NNPC discovered hydrocarbon deposits in commercial volumes in the Kolmani River II Well on the Upper Benue Trough, Gongola Basin, in the North Eastern part of the country.
The discovery of oil and gas in commercial quantity in the Gongola Basin would attract foreign investment, generate employment for people to earn income and increase in government revenues. With the above uncomparable achievements by a Manager in the Public service, Kyari has become the Game Changer in the Nigerian Oil Sector.
Ibrahim Buhari writes from Abuja
