NNPC Ltd declares state of emergency on crude oil production
…Join us or we’ll develop without you – Kyari
In a move towards increasing Nigeria’s crude oil production and growing its reserves, NNPC Ltd has declared a state of emergency on production in Nigeria’s oil and gas industry.
Group Chief Executive Officer of NNPC Ltd, Mr. Mele Kyari, disclosed this in a keynote address at the opening ceremony of the 23rd edition of the Nigeria Oil & Gas Conference and Exhibition (NOG Energy Week) in Abuja, on Tuesday.
Kyari also charged oil companies operating in the country to join hands with the NNPC Ltd as it seeks to boost Nigeria’s oil and gas production.
The NNPC GCEO warned the oil and gas firms to increase their investments to unlock the potentials of the energy sector, noting that the country’s economy will still grow without them if they fail to play their role in meeting Nigeria’s energy demand.
Kyari said that the company would henceforth lead the battle in growing crude oil production in Nigeria, adding that it will no longer allow itself to be dragged back in its quest to achieve the vision of President Bola Tinubu for the energy sector.
“We have decided to stop the debate. We have declared war on the challenges affecting our crude oil production. War means war. We have the right tools. We know what to fight. We know what we have to do at the level of assets. We have engaged our partners. And we will work together to improve the situation.
“How do we produce more oil, we must put more people to work, we must get the right technology, and the will to produce it so that we can benefit from it. Are all this lacking, no.
“What happens in our country is that we went down in our production, nowhere near our capacity or capability. You can blame anything, oil theft, integrity but when we look at our assets, we discovered that we were at two million barrels for three months and we have been unable to sustain it. But also, the sheer inability of all of us, our partners including NNPC, our inability to act quickly, in a timely manner.
“We as the partner of 80 per cent of those who produce oil and gas in the country have decided to stop the debate and we have declared a war. War means war, we have the right troops and we know what to fight. We know what we have to do at the level of assets. And we have engaged our partners. Any partner that does want to do what it is supposed to do we will get it done,” the GCEO declared.
According to him, a detailed analysis of assets revealed that Nigeria can conveniently produce two million barrels of crude oil per day without deploying new rigs, but the major impediment to achieving that remains the inability of players to act in a timely manner.
He said the “war” will help NNPC Ltd. and its partners to speedily clear all identified obstacles to effective and efficient production such as delays in procurement processes, which have become a challenge in the industry.
On medium to long-term measures aimed at boosting and sustaining production, Kyari said NNPC Ltd. would replace all the old crude oil pipelines built over four decades ago and also introduce a rig sharing programme with its partners to ensure that production rigs stay in the country for between four and five years which is the standard practice in most climes.
He called on all players in the industry to collaborate towards reducing the cost of production and boosting production to target levels.
He expressed the Company’s commitment to investing in critical midstream gas infrastructure such as the Obiafu-Obrikom-Oben (OB3) and the Ajaokuta-Kaduna-Kano gas pipelines to boost domestic gas production and supply for power generation, industrial development and economic prosperity of the country.
On Compressed Natural Gas (CNG), Kyari observed that NNPC Ltd. has since keyed into the Presidential CNG drive, adding that in conjunction with partners such as NIPCO Gas, NNPC Ltd. has built a number of CNG stations, 12 of which will be commissioned on Thursday in Lagos and Abuja.
NNPC Ltd. is the Principal Sponsor of 2024 NOG Energy Week Conference & Exhibition which has as its theme “showcasing opportunities, driving investment and meeting energy demand.”
In the same vein, Chairman Independent Petroleum Producers Group (IPPG) Abdulrazaq Isa, stated that the oil and gas industry was in dire situation as it is in need of need of extraordinary focus to mitigate the genuine concerns on its long-term sustainability.
According to the IPPG Chairman, the inability to increase production poses a risk to the 2024 budget implementation.
“Despite our world class hydrocarbon resource base, with over 37 billion barrels of proven crude oil reserves and 207 tcf and 600 tcf of proven and contingent gas reserves respectively, we find ourselves in a situation where our daily production has significantly dropped and lies at a about 1.3 million barrels of oil and 8.5 bcf of gas today.
“This is way below our capacity as a nation and by all globally acceptable standards, this reserves to production ratio is extremely low and a clear indicator that the industry is in a dire situation. In addition, we now run the risk of partial implementation of our national budget considering an estimated deficit of 400,000 bpd from the forecasted 1.78 million bpd.
“This trend in production portends another frightening dimension when we consider that in the not-too-distant future our overall installed domestic refining capacity, currently closing in on about 1.2million barrels per day, may soon outstrip our current crude oil production level with the risk of Nigeria finding itself in a position where it is unable to meet its domestic refinery crude demand or even become a net importer of crude oil, God forbid,” he said.
To arrest the dwindling production level and under-investment, Isa said that a timely resolution of IOCs divestment transactions will go a long way to raise the oil production levels.
“The immediate conclusion of all pending IOC divestment transactions: IPPG strongly advocates that our member companies – Seplat, the Renaissance Consortium and Oando – have the proven track record to successfully take over and manage these onshore and shallow water assets to realise incremental production in the region of 100,000 – 200,000 barrels of oil and over 1.5bcf of gas per day within 24 months and well over 500,000 barrels of oil per day in the long term. IPPG believes the timely approval of these IOC divestment transactions will also be a clear signal capable of restoring global investor confidence in Nigeria in an era of competing global investment destinations in Africa and very limited access to capital.
“The urgent need to address deepwater development and production: Untangling issues around deepwater development, particularly in terms of competitive fiscal regime being negotiated with Shell, Total Energies, ExxonMobil and Chevron, has the potential to unlock incremental production of 700,000 barrels per day from this terrain in the short to medium term. Enabling deepwater development will attract significant economic benefits as Nigeria has one of the world’s largest untapped deepwater resource base.
Earlier in his address, OPEC Secretary General said the advocacy for net-zero emission was misguided and not a reality of Africa’s narrative.
Speaking virtually to participants, noted that Nigeria should be allowed to develop its natural resources for its own good as oil would still be in high demand in the coming years.
“Despite these facts, I am certain you are aware of some recent predictions for peak demand by 2030 and calls for a discontinuation of investment in hydrocarbons.
“These voices are not in touch with reality, and now we are seeing large corporations and governments re-evaluate their transition strategies and timelines.
“Developing countries continue to balance priorities between developing their national economies and addressing climate change,” he said.
He assured that OPEC and its member countries will continue to advocate for a balanced and fair process for adaptation, mitigation and the means of implementation, particularly with regard to climate finance and technology that is crucial for the continent that is battling to tackle the issue of energy poverty.
“It is an unfortunate fact that still today, there are an estimated 675 million people with no access to basic forms of energy and 2.3 billion without access to clean cooking fuels.
“World leaders must unite and advocate for the necessary support and resources to make a difference in addressing this important matter,” he added.
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