*Says FG will generate $18bn revenue from projectEmmanuel Addeh in Abuja and Peter Uzoho in Lagos
The Nigerian National Petroleum Company Limited (NNPC) yesterday moved to boost its gas-to-industry programme, with the signing of a gas supply agreement with Indorama Energy PTE Limited, valued at about $7 billion in the short term.
Speaking at the event, the Group Chief Executive Officer of the national oil company, Mr. Mele Kyari, noted that the project will have a lifetime value of $18 billion, while it is expected to add $3 billion to the country’s Gross Domestic Product (GDP).
The deal, as directed by President Bola Tinubu, would also see the NNPC supply Indorama about 800 million Standard Cubic Feet (SCF) of gas.
“We are here on a Saturday to underscore the seriousness of what we are doing and our intention to deliver it and not just intention, but our determination to deliver this project.
“No doubt our laws are very clear. The Petroleum Industry Act (PIA) was specific that the NNPC must do everything possible to ensure that we harness the abundant gas resources in our country. So, it’s a requirement of law for the NNPC. But more than anything, we are a gas country with associated oil.
“But we have always focused on oil and today, it is the moment of gas all over the world, not just because the world needs it, but it is also agreed that it is a transition fuel that everyone needs and everyone can rely on,” Kyari stated.
According to him, the directive of the president also aligned with the company’s plan to ensure that it delivers on gasification projects nationwide and makes it available for businesses and individuals on demand.
Kyari stated that when gas is made available, industries will then spring up, the power supply will be boosted and employment will be created, thereby leading to an economic boom.
“So, it’s clear there’s a huge connection between harnessing gas resources and this event. And therefore, when the president said we should find gas for Indorama, we had no difficulty coming up with a solution. And the solution is very simple.
“We have resources and we will make available the additional gas that is required. We will partner with Indorama so that we sweat the upstream assets and also produce the gas.
“We will go down the chain and create the midstream facilities for these industries. For urea, increased fertiliser production and of course, including the creation of a condensate refinery,” he added.
Kyari pointed out that the project will open more vistas for further agreements with other entities in its plan to deploy gas for Nigeria’s industries.
“They’re very practical and we’re happy at the commitment of Indorama that they are out to invest at least $7 billion on this project in the short term. And perhaps this will open more gateway for us to do more business with others.
“And therefore this country is on the threshold of making value out of gas beyond any imagination. NNPC is currently pursuing many other large-scale gas projects that we could not take forward, but we’re now more than ever before determined to ensure that this also progresses. Indorama, if you need more gas, talk to us.
“Ultimately, even on this project alone, we see an annual GDP contribution of over $3 billion and perhaps lifetime government revenues of up to $18 billion, even for this project.
“So, this is a huge project and we in NNPC are committed to this. Me and my team will do everything possible to deliver it. There are no obstacles. There are no fences. We will work together to deliver on this and in the end, our country will prosper, not just that, our companies will make money,” Kyari noted.
In his remarks, the Chief Upstream Investment Officer of the NNPC Upstream Investment Management Services, Mr. Bala Wunti, who will lead the team to bring the project to fruition, noted that the programme would help support Indorama‘s expansion plan.
Noting that the deal will be mutually beneficial, he explained that it will assure gas delivery to meet the gas-based industry’s demand.
The scope of the project, he said, involves the delivery of gas, which will require the NNPC to drill and carry out development activities as well as place a robust gas delivery infrastructure through the pipelines.
“Most importantly, it will also incorporate a liquid management solution in the form of a condensate refinery. Overall, the anticipation is that at the peak of the project, about 800 million scf of gas will be made available for domestic use, part of which will be used to provide the needed quantity of gas by Indorama.
“And the balance will be supplied to the domestic market to meet power demand, commercial and other activities, particularly in eastern Nigeria.
“Following the evaluation, it was very clear that there’s significant alignment between our companies and that alignment helped us to come together to agree that we need to develop it further,” he explained.
Also speaking, the Managing Director/Chief Executive of Indorama Eleme Petrochemicals, Manish Mundra, highlighted the almost 17-year-old partnerships that had existed between both parties, explaining that the new deal will further boost the extant business relationship.
“On one hand, it is a strategic collaboration to unblock the upstream. But what’s more important is that we will partner downstream to share the value chain and that’s more important and that’s where the business lies.
“Globally Nigeria’s gas reserves and Nigeria’s strategic location should position Nigeria as one of the largest producers of urea. We’re the largest producer of ammonia, largest producers of methanol, and largest producer of petrochemical polymers.
“This is what the available resources should have done and we have started this journey. What we are going to do while we are working together on gas resources, is also to partner downstream and invest in at least two more lines of fertiliser, two lines of methanol, and one big petrochemical project besides the condensate refinery and other pipeline infrastructure which we are going to do.
“This will already put Nigeria as one of the largest producers of urea in Africa and the Western Hemisphere. NNPC can create almost 10 to 30 such partnerships,” he added.