Policy And Execution By Diezani Alison-Madueke
The Ministry of Petroleum Resources has in the last two years vigorously pursued the Transformation Agenda of President Jonathan’s administration. Oil and gas which is the mainstay of government revenues and expenditure in Nigeria is critical to supporting various policies and programs of government. The Ministry through its parastatals gives effect to government’s aspirations in the oil and gas industry and has a direct link with the ability of the government to deliver on transformation agenda through:
a) Building sustainable industries with indigenous participation
b) Delivering quality products to the Nigerian people and
c) Creating oil and gas institutions of the future
Our key accomplishments in the period 2010 – 2013 cover the entire oil and gas value chain namely;
Upstream – where we have increased exploration in frontier areas and sustained production in spite of incessant crude theft and pipeline vandalism.
Midstream (Gas) – where we have increased gas supply to power, enhanced gas commercialisation, implemented the gas infrastructure plan and gas for industrialisation.
Midstream (Oil) – where we are repairing and upgrading facilities in our refineries and pipelines distribution network in order to sustain in-country product supply.
Downstream – where we have ensured stable supply of petroleum products in spite of pipeline vandals and product theft, effective and efficient administration of the subsidy program which remains unsustainably expensive and increased domestic refining.
Additionally, improvements in local capacity and indigenous participation in infrastructure investments have been vigorously pursued. The outcome has been in upgraded training facilities and increased regulatory compliance with local content requirements. Details of the highlights across primary accomplishments include the following:
The Ministry of Petroleum Resources in line with Government drive in achieving the national aspiration of 40 billion barrels of oil reserves and 4 million barrels of oil per day production, including condensate, as captured in vision 20:20:20, has increased exploration activities in the Offshore, Onshore and Inland Basins.
In order to meet the above national aspiration, the following drilling activities were carried out in 2012:
• A total of 19 exploration wells were drilled comprising of 8 exploration wells in the JV and 11 wells (3 Exploration and 8 Appraisal wells) under the PSC.
• 93 Development wells were drilled comprising of 55 development wells under JV while the PSC delivered 38 development wells.
• Within the same year, 33 Workover wells were also drilled consisting of 32 workover wells under JV and 1 workover well in PSC.
Nigeria has nine (9) basins of which the most prospective is the Niger Delta. Others such as Anambra and Chad basins are also known to be rich in hydrocarbon.
In 2012, a total of 600Million barrels of reserves were added representing 70% reserves replacement.
As at end of year 2012, the crude oil reserve base stood at 36.8billion barrels; representing 0.06% decrease as compared to year end 2011 figures.
Gas reserves at end of year 2012 was 182Tcf representing a 0.01% drop as compared to year end 2011 figures.
In line with government’s strategy of growing NPDC’s (NNPC’s Exploration and Production Affiliate) through asset transfer, subsidiary) production NPDC’s reserve base has grown to 1.7 Billion Barrels through strategic divestment initiatives.
Crude Oil production (including condensate) has been consistently maintained above an average of 2.30 Million Barrels per Day (MBOPD) despite illegal oil bunkering, crude oil theft and pipeline vandalism. Following the Federal Government’s amnesty program, Nigeria’s production rose from an average of 1.9 mmbopd in 2009 to a peak of 2.62 mmbopd in October 2010.
Sustaining production at these levels continues to be challenged by increasing pipeline vandalism and crude theft, which intermittently results in production falling below the programmed 2.46 mmbopd and rebounding following government intervention to stem this menace. The government is tackling this problem through enforcement and the Crude Oil Fingerprinting Initiative.
As part of improving accountability with regards to Nigeria’s oil production, the Ministry of Petroleum Resources has concluded a pilot scheme for real time crude oil production monitoring. The programme which is referred to as National Production Monitoring System (NPMS) is a remote monitoring system emplaced not only to monitor real time production, primarily, but also other field parameters needed for effective reservoir management and administration.
The government is also committed to recapitalizing the National Oil Company through the asset transfer program by which government’s equity interest in assets divested by the IOC’s are transferred to NPDC.
The assignment of Federal Government interest to NPDC has served two purposes namely; Reduced the cash-call requirement for annual appropriation in respect of these assets since NPDC is a self-funding subsidiary of NNPC and secondly, the transfer of such assets are not free but on the basis of a consideration to be paid by NNPC to the federation.
Beyond this, the strategic implication is that going forward, NNPC’s upstream business will be well endowed with quality assets to be a viable, vertically integrated national oil company. These asset assignments will make NPDC a medium sized independent E & P company, with future potential production in excess of 300 kbopd.
NPDC currently supplies approximately 425MMscfd of natural gas into the domestic market to fulfill its Domestic Gas obligations to the Federation. The company plans to provide additional 100MMSscfd of gas from Oredo by year end 2013 using POOC spare capacity. NPDC is now the largest gas supplier to the domestic market
Mr. President launched the Gas Revolution initiative in 2011 with a view to jumpstarting a second era of industrialization in Nigeria after many years of lull. After a few teething challenges, this initiative is now on course. 2700 Hectares of land has now been secured at Ogidigben in Delta state for the Gas Industrial City, which will be the largest gas based industrial park in Africa. It will house Africa’s largest Petrochemical, Fertilizer and gas processing plants, creating over 100,000 jobs during the construction phase and many millions more post commencement of operation by 2017/18.
Within the past 3 years, NNPC has taken steps to expand its role in the delivery of petroleum products to the public through the NNPC Retail’s network of stations, with a view to becoming a dominant player in product retailing, as is the case with other National Oil Companies. As a result, NNPC Retail has become a more prominent player in the Retailing segment of the Oil industry and is gradually becoming the bedrock for product supply stability and the benchmark for petroleum product quality, and pricing across the country.
The number of NNPC Retail outlets has increased to 505 in Q1 2013 from 465 in 2010; a growth of about 9%. In the same vein the Company’s Market Share in total white products has grown to 13.3% over the same period. The Company has already become the market leader and the choice brand in the downstream petroleum retailing business in the country.
As the company continues to affiliate more strategically located and large volume stations, new Mega and Standard stations are also being built.
The supply of petroleum products at controlled prices to riverine communities in the Niger Delta has been significantly enhanced with an increase in the number of operational Floating Mega Stations from 6 to 9 over the same period. Additional 2 floating stations will commence operations by August 2013.
NNPC Retail has engaged the services of more than 400 Trucking companies with a total of about 3,500 trucks, as well as owners of several sea-going barges, to transport products from various product loading depots to its stations, thereby providing strong practical support Government’s employment creation drive and economic transformation. Through its operations, the Company has created employment for hundreds of thousands of Nigerians while generating and supporting massive economic activity in the Country.
NNPC Retail will also commence the sale of LPG into the domestic market before the end of 2013 as part of Government’s effort to ensure that the public secures easy access to cooking gas at affordable prices and reduces dependence on kerosene and firewood. In the first phase of this activity, the Company will inject about 100,000 branded cylinders into the market within the next 3 months in a massive drive to ensure that large numbers of families could obtain and use LPG in their homes before the end of the year. This strategy will assist in reducing the amount of kerosene consumed in the domestic economy by 200 Million litres.
The Company will also venture into the lubricants market by Q1 2013 in order to expand the customer’s choice and access to these products at competitive prices.
Plans are at an advanced stage for NNPC to enter into marine fuel bunkering business by Q4 2013. In this regard a joint venture is being negotiated with a reputable technical operator. The new company will help to streamline and standardise the business of marine bunkering in the country and transform the sector into a profitable and reputable industry that will create jobs and transfer know-how to Nigerians.
The challenges will continue to drive innovation and change in our approach to delivering an oil and gas industry that is internationally competitive and is governed by open and transparent processes to ensure security
•Above are excerpts from the Tuesday presentation of Mrs. Alison-Madueke, Minister of Petroleum, at the Mid-Term Ministerial Press Briefing in Abuja.