How NNPC created opportunities out of COVID-19 challenges

By Steve Agbota

Year 2020 threw up a health challenge that practically brought the whole world to its knees. The coronavirus (COVID-19) pandemic precipitated the lockdown of social and economic activities across the world displacing the fortunes of many nations and businesses with the Oil and Gas Sector not being an exemption. It was a calamity never seen before.

However, like the hot fire that produces the finest steel, the challenges that COVID-19 threw at humanity brought the astute management skills of the Nigerian National Petroleum Corporation (NNPC) Group Managing Director, Mr Mele Kyari, and his team to the fore. NNPC conceived and implemented innovative business continuity strategies, resulting in unprecedented feats including those, which had hitherto proved elusive.

Its Group Corporate Affairs Manager, Dr Kehinde Obateru, cited the three million barrels per day crude oil production in April 2020 as one of the milestones achievements. He told Daily Sun: “This was despite the nation being on lockdown to mitigate the effects of COVID-19 in Nigeria, which resulted in most staff of the corporation working remotely.

“Nonetheless, due to the unavoidable impacts of the pandemic including the OPEC+ production curtailment agreement, as at November 2020, average daily crude and condensate production from NNPC’s Joint Venture and Production Sharing Contracts stood at 1.542million barrels per day against the corporation’s initial 2020 target of 1.863mbpd and an average daily gas production of 6.020billion cubic feet per day as against the 2020 plan of 6.243bcfd.”

NNPC’s upstream flagship, the Nigerian Petroleum Development Company (NPDC) as at November 2020 recorded a total oil and gas production output of 269kbopd and 1.5billion Standard Cubic Feet of Gas Per Day of which the company’s equity production stood at 163 kbopd and 1.38bcfd respectively.

He explained: “It is imperative to note that the company would have achieved more but for the Nigerian government’s determination to fully comply and support the efforts of OPEC and it allies to protect the global oil & gas industry in the face of the challenges brought on by the unprecedented drop in demand for the ‘black gold’.

Obateru insisted that NNPC management’s determination to add value to the Nigerian economy culminated in the successful flagging-off by President Muhammadu Buhari on June 30, 2020, of the construction phase of the Ajaokuta-Kaduna-Kano (AKK) gas pipeline project: “The project, described as a game-changer by the President, is a section of the Trans-Nigeria Gas Pipeline (TNGP), with a capacity to transport about 2.2billion cubic feet of gas per day.

“It is expected to be fed from the existing domestic infrastructure with a capacity of over 1.5BCF/D being expanded by the Escravos Lagos Pipeline System 11 (ELPS 11) and Oben-Obiafu-Obricom (OB3) gas pipeline project. This has also reached 96.34 per cent completion and will double the capacity to over 3.5BCF/D.”

The AKK would also facilitate the development of three-base Independent Power Plants (IPPS) in Abuja with the capacity of 1,350 megawatts, Kaduna with 900 megawatts and Kano with 1,350 megawatts and stir the development of gas-based industries along its corridor and beyond. The AKK initially estimated to cost $2.89billion was renegotiated down to $2.59billion by Kyari and his team, saving $300 million.

Still under the COVID-19 lock down, the NNPC, was able to rally shareholders of the Nigeria Liquefied Natural Gas (NLNG) to secure the Engineering, Procurement and Construction of Train 7.  And for the refineries, the spokesman said: “Efforts that will ensure 90 per cent capacity utilization are on going with phase one of Port Harcourt Refining Company Limited rehabilitation programme by Technimot SPA, Original Refinery Representative, completed. Also, NNPC engaged NETCO/KBR as Project Monitoring Committee for PHRC, WRPC and KRPC rehabilitation. The phase 1 of WRPC rehabilitation including technical audit has commenced.”

The resilience of NNPC was also felt at the pump as zero fuel queues were recorded as a result of seamless and sustained supply of petrol throughout the year with availability of complementary products in sufficient quantity. The corporation achieved 38 per cent pipeline availability sustained system 2B pipeline operations. With -3.9 per cent average variance, it moved 2.696m3 (cubic meter) of products across the entire pipeline network by October 2020.

The automation of downstream operations with the deployment of customer express solution and online marketer portal now enables marketers to procure petroleum products online from Petroleum Products Marketing Company (PPMC).

Obateru disclosed: “The automation of vessel management and chartering portal is in progress awaiting operationalization of shipping strategy. This has enabled PPMC to achieve 82 per cent implementation of ISO Certification.”

NNPC Retail Limited, a downstream subsidiary of the corporation launched its lubricants on February 28, 2020, with a record of 0.18million sales in October and achieved a market share of 25 per cent as at Q3 2020. The company also launched Autogas on December 1, 2020: “It is also digitizing its operations that will enable full automation of the company’s business value chain, from the sourcing of products to storage, to how the company’s products are moved from point A to point B and how they get to its filling stations, how customers book for products, how they obtain and pay for the products online.”

The full automation would make business transactions between the company and its external stakeholders seamless, faster, efficient and transparent. The programme would provide a win-win scenario for both the company and the customers.

The published 2018 and 2019 audited financial statements validated NNPC enlistment as a partner company of the Extractive Industries Transparency Initiative (EITI): “Today, the Finance and Account Directorate emplaced and sustained timely remittance to the Federation Accounts Allocation Committee (FAAC), ensured crude cost are settled within 90 days, ahead of FAAC meetings and eliminated unjustifiable deductions thereby improving remittances to FAAC.”

Its Corporate Services Directorate enhanced NNPC Remote Work Capability using Microsoft teams, deployed Enterprise Content Management (ECM) and automated the Management Promotion and Performance Management processes.  These automated processes and the remote collaboration tools introduced considerably reduced staff travel and other expenses resulting in huge cost savings for the corporation. The directorate also concluded the recruitment and unbundling processes for the graduate trainees.

The NNPC has engendered an improved relationship with the National Assembly especially in their statutory oversight duties over the corporation.

To keep the shareholders abreast of its activities, Obateru said: “The corporation regularly aired the weekly Oil and Gas Forum on NTA and Radio Nigeria; produced the monthly NNPC News/Quarterly Magazine, published all the approved NNPC monthly financial and operations reports and occasionally provided live coverage for  tender bid openings and   published the list of qualified bidders  on the website.

“NNPC saw the pandemic as an opportunity to utilize its leadership position in the Nigerian oil and gas industry to rally all stakeholders in the upstream, midstream and downstream sectors to raise a whopping sum of N21billion in support of the federal and state governments in the face of the COVID-19 pandemic.

“The intervention group was able to deliver medical infrastructure in form of permanent Emergency and Infectious Diseases hospitals in the six geopolitical zones, which will outlive COVID-19. Equally, isolations centres, ambulances, ventilators and other medical consumables were delivered to the 36 states and Federal Capital Territory.

“The launch of NNPC Health Maintenance Organization with five unique products by the Ventures and Business Development Directorate is seen as the right step in the right direction.”

He concluded: “2020 can be regarded as an eventful and remarkable year for NNPC established 43 years ago. Despite the myriads of challenges by COVID-19, Mallam Kyari and his team are poised to break new grounds in the years ahead.”