Mele Kyari is repositioning NNPCL to become Nigeria’s oil powerhouse, according to Femi Soneye

On July 7, 2019, Mele Kyari was appointed Group Managing Director of the now-defunct Nigerian National Petroleum Corporation (NNPC), taking over at a pivotal time for the corporation’s existence, the country’s economy, and the entire oil and gas industry in Nigeria.

It was a difficult time marked by low production, increasing oil pipeline vandalism, massive oil theft, and disgruntled corporation employees.

His task was clearly beyond him. His appointment was crucial since it appeared that time was running out. It was obvious that it wasn’t a task for the weak-willed. Kyari, however, was no immature child. Being an insider, he was familiar with how the NNPC system operated. Without a doubt, he would give it his best effort.

Kyari jumped right in, as does any tenacious achiever or visionary. He released his “Roadmap to Global Excellence” based on the TAPE Agenda just days after being appointed. Transparency, Accountability, and Performance Excellence, or TAPE, is a concept in the roadmap. The GMD’s administration at the company was guided by this principle during his tenure there.

The TAPE became the benchmark for leading the new company forward in a global economy still reeling from the effects of the coronavirus pandemic, which devastated the world in 2020 and 2021, with his appointment by Nigeria’s President Muhammadu Buhari as Chief Executive Officer of the Nigerian National Oil Company Limited (NNPCL), the successor company to the NNPC under the new dispensation ushered in by the Petroleum Industry Act, which came into force in 2021.

Although he has only been the CEO of NNPCL for a little over two years, the company’s performance during that time has been, to put it mildly, outstanding. Situations and circumstances that had previously seemed insurmountable were changed under his leadership.

One of these issues is the willful theft of Nigeria’s oil by criminal groups and individuals, which made it difficult for Nigeria to satisfy its oil production limit for a considerable amount of time. Under Kyari’s insightful leadership, the management of NNPCL devised the “Crude Theft Monitoring Application” to address the issue.

The portal offers applications for reporting incidents, rapid follow-up, and responses, as well as one for validating flimsy sales paperwork.

Prior to the release of the application, Kyari had accompanied Chief Timipre Sylva, the then-minister of state for petroleum resources, to the creeks in the Niger Delta to check on the misdeeds in March 2022 in a deliberate effort to stop oil theft and pipeline vandalism. The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, the Chief of Defence Staff, General Lucky Irabor, and security personnel are among the other high government officials.

Following this operation, Kyari reported finding a nine-year-old illegal oil connection line from Forcados Terminal into the sea that was four kilometers long.

The daily oil production has significantly increased to 1.6 million barrels per day, indicating that measures to reduce crude oil theft and illegal refineries are undoubtedly having a positive impact.

Additionally, as of November 2022, Nigeria was again the top crude oil producer in Africa, surpassing Angola’s 1.088 mb/d and Algeria’s 1.021 mb/d, according to data from the Fourth Quarter of 2022.

Killing the bear

Another major issue “slain” by Kyari’s management of the business was the ongoing losses the previous NNPC had endured before he took over as CEO in 2019.

The business announced a ‘profit’ of N674.1 billion in the 2021 fiscal year, up from N287 billion in 2020, and it did so again in 2022. When compared to the N287 billion previously recorded in 2020, the figure reflected an increase of N387 billion, or 134.8 percent.

The improvement, according to Kyari, who disclosed it via the oil company’s verified Twitter account, came after the Board of Directors of the oil company approved the 2021 audited financial results. According to him, the NNPC Limited has advanced to a new performance level, increasing its earnings by 134.8% year over year from N287 billion in 2020 to N674 billion in 2021.

Along with helping the corporation turn a profit, Kyari has helped the NNPCL settle long-standing issues with its business partners, particularly the International Oil Companies (IOCs). This is part of its efforts to increase Nigeria’s oil production and open up investment opportunities in the deepwater sector following the establishment of the PIA.

In order to assure the production of about 10 billion barrels of crude oil and earn over $500 billion in revenue, the NNPC and the IOCs signed a number of Production Sharing Contract (PSC) agreements. The Production Sharing Agreement, Dispute Settlement Agreement, Settlement Repayment Agreement, and Escrow Agreement are the three contracts in question.

Still speaking of the connection with the IOCs, Kyari’s leadership of NNPCL is credited with the payment of Nigeria’s $5.1 billion joint venture cash call arrears to the IOCs. The Alternative Funding Approach (AFA), which took the place of the previous cash-call payment approach, made this possible.

The AFA model permitted NNPC to use its own finances to finance its portion of joint venture operations, lowering the nation’s dependency on foreign borrowing and boosting the amount of investment flowing into the sector. Since then, many African nations that produce oil have embraced this idea.

Similar to this, an asset transfer agreement was struck by NNPC Limited and Addax Petroleum Company to resolve the conflict over oil mining leases 123/124 and 126/137.

The accord puts an end to the conflict over OMLs 123/124 and 126/137, run by Addax Petroleum Nigeria Limited.

NNPC and Ashland initially agreed to a production sharing contract for the blocks in 1973, but it was cancelled after 25 years.

In support of the intended Nigeria-Morocco gas pipeline project, the NNPC also signed numerous Memoranda of Association (MoU) with numerous nations, including the national oil firms of Ghana, Gambia, Guinea, Guinea Bissau, and Sierra Leone.

The Nigeria-Morocco Gas Pipeline (NMGP), a project of the federal governments of Nigeria and Morocco, is a 5,600 km gas pipeline that runs through 13 African nations, including Nigeria, Benin, Togo, Ghana, Cote d’Ivoire, Liberia, Sierra Leone, Guinea, Guinea Bissau, Gambia, Senegal, and Mauritania, before ending in Morocco.

When the project is finished, Nigeria will supply the Kingdom of Morocco with around 3 billion standard cubic feet of gas per day (3 bscf/d), and then Europe.

For hydrocarbon projects in the Niger Delta, the NNPC Limited signed an external project finance arrangement worth $1.4 billion in 2022. The contract was signed at a ceremony in London and is known by the codename Project Panther (under the joint venture between NNPC Limited and Chevron Nigeria Limited).

In line with its goal of maintaining a dominant position in Nigeria’s petroleum downstream industry, the NNPC Limited purchased OVH Energy Marketing (OVHEM), owner and operator of the Oando downstream assets, in 2022.

By acquiring OVH, NNPC Retail Limited will expand on the company’s current performance and run model service shops by utilizing its significant asset base and business competencies.

The Kolmani Integrated Development Project in Bauchi State, which marks the start of efforts to commercially exploit oil in the northern region of Nigeria, was flagged off in November 2022. It is, however, by far one of the most significant achievements of Kyari’s stewardship at NNPCL.

The Kolmani Oil Field, also known as OPL 809 and 810, is located in the Upper Benue Trough’s Gongola Basin and crosses the borders of the states of Bauchi and Gombe. It is thought to contain a reserve of roughly one billion barrels of crude oil.

The Nigerian National Petroleum Company Limited (NNPCL) is the concessionaire and owner of the oil blocks, along with its partners, New Nigeria Development Company Ltd., Africa Oilfield Movers Ltd., and SEEPCO.

During the first stage, the well is anticipated to produce 50,000 barrels of oil per day.

The Ajaokuta-Kaduna-Kano Gas Pipeline Project, which is currently 70% complete, is also important. President Muhammadu Buhari launched the AKK Gas Pipeline Project in June 2020.

Speaking recently about the progress made at the 600-kilometer-long facility, Kyari said that of the $2.5 billion allocated for the project, more than $1.1 billion had already been spent, with all of the money coming from NNPCL’s own resources.

The AKK Gas Pipeline Project will be able to deliver two billion standard cubic feet of natural gas per day to three independent power plants that are being considered in Abuja, Kaduna, and Kano, as well as other gas-based industries and other known and potential off-takers along the pipeline’s entire length.

It is, in Kyari’s words, “of immense proportion and value to our country and to the socioeconomic growth of our country” and is one of the largest projects the NNPCL has ever undertaken.

Choosing Kyari to manage the NNPCL was without a doubt one of President Buhari’s best moves as ruler of the most populous country in Africa.

In addition to the advancements mentioned above, Kyari has also started the renovation and modernization of the refineries in Port Harcourt, Warri, and Kaduna.

Additionally, he has launched programs and regulations that have improved the company’s operations’ efficiency and openness. These include establishing a new trading subsidiary, a new division for selling crude oil, and a new performance management system that increases responsibility in the Nigerian oil and gas industry by releasing monthly financial and operational reports.

Soneye, a journalist for more than 25 years and publisher of Per Second News, writes from Lagos.