By Victor Odiogor
The quest to achieve energy renaissance in Africa has long been challenged by infrastructure limitations, financial constraints, policy and regulatory hurdles, technical capacity gaps, grid integration, fossil fuel dependency, political instability and a whole lot of other variables. In spite of these depressing challenges, there is global consensus that Africa is the next destination that will provide greater support to the international energy market. As the largest producer of oil and gas on the continent, the fortunes of Nigeria and Africa are intertwined and, for the long awaited renaissance to happen, it must as a necessity bear the imprimatur of NNPCL, Nigeria’s oil behemoth. Long shackled by regulatory issues, the deregulation of Nigeria’s oil and gas sector in the aftermath of the delivery of the Petroleum Industry Act in 2021 further strengthens the hands of Africa’s largest energy player to assert itself and play the pivotal role expected of it in the berthing of this renaissance.
The current leadership of Nigerian National Petroleum Corporation (NNPCL), under the guidance of Mele Kyari, sees the limitless possibilities inherent in this unfolding revolution and is playing a pivotal role to harness its transformative capacity. Following the transformation of NNPCL into a CAMA company as a result of the implementation of the Petroleum Industry Act (PIA), 2021, Kyari promised to transform the company into a respected global conglomerate. His relentless and unwavering commitment to this promise was no fluke but a consolidation of the impressive work he had done in cleansing the Augean stable and returning the once maligned government-owned company to reckoning and respectability. Barely two years after the transformation of the company, it was not surprising that the legislative branch of government notorious for its running battles with NNPCL and indeed with the executive branch singled out NNPCL for commendation. Specifically, Rt. Hon. Abbas, the Speaker of the House of Representatives, applauded the raft of reforms introduced by the company under the leadership of Kyari. He said, “When we discuss the Nigerian economy, we must talk about NNPC Ltd. As a dominant force. We are delighted that the ongoing reforms at NNPC Ltd have started yielding fruit. It is pleasing to hear that you have moved from a loss-making entity to a profit-making one. We urge you to sustain these reforms.”
At his inception of office in 2019, Kyari envisioned NNPCL as a dynamic global energy company that provides affordable sustainable energy to Nigeria. Under his leadership, NNPCL has vigorously pursued the Improvement of the supply chain, development of gas infrastructure, cleaner energy options, fostering of innovations, implementation of portfolio management and full-throated support for exploration activities. These lofty goals have shaped the massive investments he has continued to make at the helm of the company.
Kyari’s vision is driven by the need to address the gaps in the energy access which ultimately impacts millions of Nigerians. NNPCL under Kyari has broadened its operations. NNPCL sees huge opportunities in a deregulated energy space and has invested heavily in the downstream sector. It is in line with this vision that the company acquired OVH Energy Marketing (OVHEM), owner and operator of the Oando downstream assets. This mega acquisition under its Accelerated Network Expansion (ANEX) Initiative has the sole aim of strengthening the company’s downstream business portfolio and enhancing profitability and guaranteeing national energy security. This acquisition expanded its downstream footprints by bringing a total of 380 filling stations into its network in Nigeria and Togo. The company has the goal of achieving 1,500 filling stations in the foreseeable future. The company also acquired a reception jetty with a monthly capacity of 240,000MT, eight LPG plants, three lube blending plants, three aviation depots and 12 warehouses. With the goal of expanding its global footprint, the company began exporting LNG to Japan and China in June 2024. It uses a Delivered Ex-Ship (DES) model, which makes it possible for them to deliver the product at a specific port and are responsible for the shipment and insurance.
The current management of NNPC has an ambitious upstream vision and is determined to utilize the country’s abundant gas resources to unleash industrialization and economic growth. Shortly after he took office, Kyari identified gas as a resource that can be harnessed and leveraged for economic growth opportunities. Under him, NNPC has not only keyed into the government plan of using gas as a transition fuel but is currently driving the process. NNPCL continues to sustain gas development projects and has committed to resolving the energy trilemma; the challenge of balancing energy security, affordability and sustainability. Under the guidance of Kyari, the $550 million upstream gas project between NNPC and TotalEnergies for the development of the Ubeta field has taken off. When operational, this upstream gas project will deliver 350 million standard cubic feet of gas per day. The company is set to deliver the Obiafu-Obrikom-Oben (OB3) Gas Pipeline project, the inter- connector, which will link the Eastern gas pipeline network to the Escravos-Lagos Pipeline System (ELPS) in the West and the Ajaokouta-Kaduna-Kano (AKK) pipeline in the North. On completion, the pipeline will deliver about 2.2 billion standard cubic feet of gas into the network and give the country a breather on demand.
There is no doubt that NNPC has taken significant steps to transform the energy landscape; it is building several compressed natural gas (CNG) mother stations across the country. The company and its partners have begun the construction of five mini-LNG plants in Ajaokuta, Kogi State, worth $500 million. The five mini-LNG plants include NNPC Prime LNG, NGML/Gasnexus LNG, BUA LNG, Highland LNG and LNG Arete. NNPC has a stake in three of the five mini-LNG plants, namely, 90 per cent in Prime LNG, 50 per cent in NGML/Gasnexus and 10 per cent in BUA LNG. The aim of these projects is to enhance the current 1.6 billion standard cubic feet of gas supplied to the domestic market.
The massive investments embarked upon by NNPCL in CNG and LNG projects goes beyond these laudable objectives; the company seeks to resolve the challenges of energy affordability and environmental sustainability in one swoop and continues to prioritize infrastructure development, local partnerships and innovative solutions. It is irrevocably committed to a cleaner and affordable energy future for Nigerians. Under Mele Kyari’s tenure, NNPCL has taken a leading role in unlocking Africa’s potential in the energy’s sector while building infrastructure that will unleash economic growth. The Tinubu administration deserves to be applauded for rolling out fiscal incentives aimed at revitalizing Nigeria’s oil and gas sector. Two major fiscal incentives worthy of mention include Value Added Tax (VAT) Modification Order 2024 and Notice of Tax for Deep Offshore Oil and Gas Production, in accordance with the Oil and gas Companies (Tax Incentives Exemption, Remission, etc.) Order 2024. Government envisioned these incentives to lower cost of living, bolster energy security and reposition Nigeria’s deep offshore basin as a preferred destination for global oil and gas investments. As a result of the reduction of the risk factor, investors are coming to the realization that investing in Nigeria offers real opportunity for return on investments. These fiscal incentives have enabled NNPCL to formalize and announce many Final Investment Decisions (FIDs) and in the process enhanced its capacity to continue to play a critical role in Africa’s quest for energy renaissance.
• Victor Odiogor, an analyst contributed this piece from Surulere, Lagos.