Oil & Energy
NNPC To Introduce New Business Models For Viability
In a bid to ensure the commercial viability of Nigerian National Petroleum Corporation (NNPC), the management of the Corporation has said it would introduce new business models in all its strategic business units (SBUs) and Corporate Service Units (CSUs).
Speaking during his inaugural town hall meeting with the management and staff of the NNPC recently, the Group Managing Director (GMD), Andrew Yakubu stated that the management team would reposition the Corporation to be commercially focused and profit-driven organisation that is governed by best management practices.
According to Yakubu using the current technology, it would pursue and maintain competitive operational and business efficiency, cost effectiveness, input/output optimization revenue maximization and profitability. It will be recalled that NNPC’s exploration production arm, National Petroleum Development Company (NPDC) before 2010, its production level stood at 65,000 bpd, but in line with the directive it was given by 2010 to attain a production level of 250,000 bpd by 2015, which out grows its production to the current 130,000 bpd.
Commenting on NPDC’s current production level of which the bulk of it is from the Oil Mining Leases (OMLs) assigned to the company through the divestment by some Joint Venture Partners, the company’s managing director, Mr Victor Briggs described the growth as not being organic therefore the need for the company to commence aggressive drilling programme to make its production organic.
He therefore said to attain this target, NPDC has activated a plan to drill 40 wells in the next five years which is an average of eight wells per year.
Briggs noted that the plan was significant and ambitious considering that in the five years the company only 10 wells, which is an average of two wells per year.
He disclosed that the aggressive drilling programme has started with the drilling of Okono 6 and 7 wells in OML 119.
“These two new wells are producing 12,000 bpd. The only way we can increase our production is really by going out there and do the work. It is either you are repairing a well that has gone down because there are technical issues or you are drilling a well. In the case of Okono, it is the latter because we know there are potentials and all we did was to go out there and drill”, he said.
He added that for the company to attain 250,000 bpd target by 2015, it has to do another 100 per cent growth as it did from between 60,000 bpd and 65,000 bpd to about 130,000 bpd.
Briggs explained that first of all, they tried to repair some of the wells in order to restore their production capacities.
Citing OML 26 as an instance, he said from when the asset was handed over the NPDC in June and now the production of the field was doubled.
His words: “To meet the 250,000 bpd target by 2015 means doubling our production as I said earlier, but lam confident that we will meet the target because the resources are there and the reserves are there and we have the people. Everything is therefore set for us to meet the target. For example, in the last five years NPDC drilled 10 wells, but we have a target to drill about 40 wells in the next five years. We have two rigs on site today, one offshore and the other one onshore and by the middle of next year we will bring in one more rig and toward the end of the year we will bring in the fourth rig. I believe we shall keep those rigs for the next two years”.
He further said more rigs would be deployed by next year noting that also key to the programme was the effort to grow the reserves as this was the only was to ensure sustainability.
The Federal Government has offered explanation with regard to recent changes to fuel sulphur content standards for diesel.
The Government said the change was part of a regional harmonisation effort, not a relaxation of regulations for local refineries.
The Chief Executive, Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, told newsmen that the move was only adhering to a 2020 decision by the Economic Community of West African States (ECOWAS) which mandated a gradual shift to cleaner fuels across the region.
Ahmed said the new limits comply with the decision by ECOWAS that mandated stricter fuel specifications, with enforcement starting in January 2021 for non-ECOWAS imports and January 2025 for ECOWAS refineries.
“We are merely implementing the ECOWAS decision adopted in 2020. So, a local refinery with a 650 ppm sulphur in its product is permissible and safe under the ECOWAS rule until January next year where a uniform standard would apply to both the locally refined and imported products outside West Africa”, Ahmed said.
He said importers were notified of the progressive reduction in allowable sulphur content, reaching 200 ppm this month from 300 ppm in February, well before the giant Dangote refinery began supplying diesel.
Recall that an S&P Global report, last week, noted a significant shift in the West African fuel market after Nigeria altered its maximum diesel sulphur content from 200 parts per million (ppm) to around 650 ppm, sparking concerns it might be lowering its standards to accommodate domestically produced diesel which exceeds the 200 ppm cap.
High sulphur content in fuels can damage engines and contribute to air pollution. Nevertheless, the ECOWAS rule currently allows locally produced fuel to have a higher sulphur content until January 2025.
At that point, a uniform standard of below 5 ppm will apply to both domestic refining and imports from outside West Africa.
Importers were previously permitted to bring in diesel with a sulphur content between 1,500 ppm and 3,000 ppm.
It would be noted that the shift to cleaner fuels aligns with global environmental efforts and ensures a level playing field for regional refiners.
The Port Harcourt Electricity Distribution (PHED) plc says it has commenced implementation of the April 2024 Supplementary Order to the MYTO in its franchise area while assuring customers of improved service delivery.
The Supplementary order, which took effect on April 3, 2024, emphasizes provisions of the MYTO applicable to customers on the Band A segment taking into consideration other favorable obligations by the service provider to Band A customers.
The Head, Corporate Communications of the company, Olubukola Ilvebare, revealed that under the new tariff regime, customers on Band A Feeders who typically receive a minimum supply of power for 20hours per day, would now be obliged to pay N225/kwh.
“According to the Order, this new tariff is modeled to cushion the effects of recent shifts in key economic indices such as inflation rates, foreign exchange rates, gas prices, as well as enable improved delivery of other responsibilities across the value chain which impact operational efficiencies and ability to reliably supply power to esteemed customers.
“PHED assures Band A customers of full compliance with the objectives of the new tariff order”, he stated.
Ilvebare also said the management team was committed to delivering of optimal and quality services in this cost reflective dispensation.
The PHED further informed its esteemed customers on the other service Bands of B, C D & E, that their tariff remains unchanged, adding that the recently implemented supplementary order was only APPLICABLE to customers on Band A Feeders.
The Nigerian National Petroleum Company Ltd (NNPCL) has announced the signing of an agreement with African Refinery for a share subscription agreement with Port-Harcourt Refinery.
The agreement would see the co-location of a 100,000bpd refinery within the Port-Harcourt Refinery complex.
This was disclosed in a press statement on the company’s official X handle detailing the nitty-gritty of the deal.
According to the NNPCL, the new refinery, when operational, would produce PMS, AGO, ATK, LPG for both the local and international markets.
It stated, “NNPC Limited’s moves to boost local refining capacity witnessed a boost today with the signing of share subscription agreement between NNPC Limited and African Refinery Port Harcourt Limited for the co-location of a 100,000bpd capacity refinery within the PHRC complex.
“The signing of the agreement is a significant step towards setting in motion the process of building a new refinery which, when fully operational, will supply PMS, AGO, ATK, LPG, and other petroleum products to the local and international markets and provide employment opportunities for Nigerians.
By: Lady Godknows Ogbulu
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