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NNPC: Leveraging technology to boost local capacity

Uche Usim, Abuja

Energy producing nations across the world are redesigning their crude production and distribution processes and procedures by deploying latest tools in Information and Communications Technology (ICT) to drive it. 

In Nigeria, the Nigerian National Petroleum Corporation (NNPC) has boarded the train and rolled out several strategies and programmes to boost efficiency.

The initiatives, which have led to remarkable improvement in crude production, have also cascaded down to its subsidiaries.

Only last week, the Petroleum Products and Marketing Company (PPMC), announced a revenue generation of N337.63 billion from white products sale.

The national oil company itself declared an increased trading surplus of N5.28 billion in its December 2019 operations compared to the N3.95 billion surplus posted in November last year.

The information was contained in the December 2019 edition of NNPC’s Monthly Financial and Operations Report (MFOR), which, among others, showed that the 34 per cent increase for the period resulted from improved performances by some of its entities both in the upstream and downstream sectors.

On assumption of office, the Group Managing Director of the NNPC, Mr Mele Kyari assured that deepening the use of technology to boost efficiency in the oil sector was his focal point.

“The NNPC is leveraging technology and innovation to achieve the goal of building an energy company of global excellence. We call on stakeholders to collaborate with the corporation in an atmosphere that is beneficial to all and emplaces Nigeria on the path of growth and development”, the NNPC GMD, Mele Kyari said at a recent oil and gas conference in Abuja.

He added that the corporation targets increasing oil production from 2.3 million barrels per day to three million bpd and at the same time, working with partners to significantly reduce cost per barrel in order to improve the flow of the needed revenue to support economic diversification.

Subsidiaries

So far, NNPC’s subsidiaries with notable improved positions include: Integrated Data Services Limited (IDSL), Nigeria Gas Marketing Company (NGMC), Nigerian Pipeline and Storage Company (NPSC) and Duke Oil Incorporated.

It explained that in general terms, the performance was impacted positively by the reduced deficit posted by NNPC corporate Headquarters during the period under review; adjustments to previously understated revenues by IDSL and Duke Oil; and reduction in the costs of pipeline repairs/Right of Way maintenance and gas purchases by NPSC and NGMC respectively.

Gas

In the gas sector, out of the 239.29billion Cubic Feet (BCF) of gas supplied in December 2019, a total of 148.32BCF of gas was commercialized, consisting of 34.78BCF and 113.54BCF for the domestic and export market respectively.

According to the report, this translated to a supply of 1,121.77Million Standard Cubic Feet per day (mmscfd) of gas to the domestic market and 3,662.70mmscfd of gas supplied to the export market for the month.

The corporation noted that 62.22 per cent of the average daily gas produced was commercialized, while the balance of 37.78 per cent was re-injected, used as Upstream fuel gas or flared, adding that gas flare rate was 7.78 per cent for the month under review i.e. 598.03mmscfd, compared with the average gas flare rate of 8.56 per cent i.e. 678.02mmscfd for the period December 2018 to December 2019.

The report stated that gas supply for the period December 2018 to December 2019 stood at 3,105.48BCF out of which 466.00BCF and 1,369.90BCF were commercialized for the domestic and export market respectively, explaining that gas re–injected, Fuel gas and Gas flared, stood at 1,269.59BCF.

PPMC

In the Downstream Sector, Petroleum Products Marketing Company (PPMC), NNPC’s Downstream entity in charge of bulk supply and distribution of petroleum products, distributed and sold 2.775billion litres of white products in December 2019 compared with 0.841billion litres in November same year.

This comprised 2.762billion litres of Premium Motor Spirit (PMS) otherwise called petrol, 0.013billion litres of Automotive Gas Oil (AGO) or diesel, and 0.000billion litres of Dual Purpose Kerosene (DPK) as well as sale of special product of 0.003billion litres of Low Pure Fuel Oil (LPFO) in the month under review.

The sale of white products for the period December 2018 to December 2019 stood at 21.861billion litres, with PMS accounting for 21.514billion litres or 98.41 per cent.

In terms of value, N337.63 billion was made on the sale of white products by PPMC in December 2019, compared to N105.62billion sales in November, 2019.

Revenues generated from the sales of white products for the period December 2018 to December 2019 stood at N2,705.76billion, with PMS contributing about 97.56 per cent  of the sales with a value of N2,639.68billion.

Pipeline vandalism

40 vandalized pipeline points, representing about 41 per cent decrease from the 68 points vandalized in November 2019.

The report said that out of the vandalized points, 10 failed to be welded, while none was ruptured.

Atlas Cove-Mosimi and Mosimi-Ibadan axis accounted for 35 per cent and 30 per cent of the breaks respectively, while other routes accounted for the remaining 35 per cent.

NNPC explained in the release that it had stepped up collaboration with the local communities and other stakeholders to stem pipeline vandalism menace.

Gas expansion

The NNPC boss said there are ongoing plans to aggressively expand the domestic gas footprint with the delivery of the Escravos-Lagos Pipeline System (ELPS) II to double capacity from 1.1billion standard cubic feet of gas (BSCF) to 2.2BSCF and the OB3 gas pipeline to connect East and the West. The NNPC, he revealed, would commence the construction of the Ajaokuta-Kaduna-Kano gas pipeline in second quarter of 2020 to serve as an enabler to further boost the economic activities of the country.

He hailed the recent passage of the Deep Offshore Act into law, saying it has set the industry on the path of irreversible growth.

“Nigeria as Africa’s leading exporter of LNG and the fourth in the world after Qatar, Australia and Malaysia, is ready to capture more LNG market with the Final Investment Decision of the NLNG Train 7.

“Oil and gas resources have remained the major source of revenue that has kept the wheels of Nigeria moving for over five decades. Oil, as we all know, has served as key enabler to the economic transformation of many nations like Norway, Saudi Arabia, UAE, Qatar and many other oil resources dependent nations. It is not a new story that most resource dependent nations rely on their dominant natural resource to drive other key economic initiatives and activities.

“This is true of Nigeria and many other countries represented at the conference.

The connection between the oil and gas industry and the Nigeria economy is intricate. Every aspect of the nation’s economic and social life revolves around the hydrocarbon resource”, he explained.

Diversification

Kyari insists there is a need for hard work to diversify the economy away from over dependence on oil revenues in order to avoid the risk of market fluctuations that may impact the nation’s fiscal equation.

He affirmed that the Buhari administration has made it a priority to ensure revenues from oil and gas resources are utilized to support the emergence and growth of other non-oil sectors of the economy.

“In order to achieve this objective, it means more money will be required from the oil and gas to fund new economic projects outside the Oil and Gas Industry.

“The NNPC has been repositioned to support the vision of Mr. President for economic diversification. NNPC targets increasing oil production from 2.3million barrels per day to 3million bbl/day and at the same time working with partners to significantly reduce cost per barrel in order to improve the flow of the needed revenue to support economic diversification.

“The NNPC is encouraging private investors to join the train that traverses the oil and gas value chain to create more value and job opportunities for the nation’s teaming youths. Nigeria is still a net importer of petroleum products due to the current state of NNPC refineries and the long absence of private investment in the refining sector.

“We are inviting investors to key into the revamp and expansion of domestic refining capacity in order to support the growth of the Downstream sector and guaranty energy security for the nation.

“We are progressing with the establishment of condensate refineries to fast-track domestic supply of petroleum products. In the same vein, the corporation would support the actualization of the 650Kbbl/day Dangote Refinery, as well as other private initiatives along this line. Our plan is for Nigeria to become a net exporter of petroleum products by 2023.

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