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NNPC gets $2b discount on re-negotiated contract



Baru: Sheds light on NNPC contracts with providers

By Yetunde Bada

The Nigerian National Petroleum Corporation (NNPC) has secured $2 billion discount from re-negotiated upstream contracts being executed by its various service providers in the last one year.

The Group Managing Director of the corporation, Dr Maikanti Baru, made this known in a message to mark one year of his headship of the organisation.

In a statement by Mr Ndu Ughamadu, NNPC Group General Manager, Group Public Affairs Division, quoted Baru saying that the discount was got in the quest to continually drive down the high cost of production in the oil industry.

He said that the corporation had successfully reduced cost of producing a barrel of crude from 27 dollars per barrel to 22 dollars per barrel.

In the upstream segment of the sector, he said, that cost reduction and efficiency were key features that the corporation would focus attention on.


Baru said that there had been significant increase in crude oil reserves and production, averaging national daily production of 1.83 million barrels of oil and condensate.

He disclosed that currently, “the year-to-date 2017 average production hovers around 1.88 million barrels’’.

He said that with improvement in security and resumption of production on Forcados Oil Terminal (FOT) and Qua Iboe Terminal pipelines, average national production was expected to increase.

According to him, it will surpass 2017 target of 2.2 million barrels of oil and condensate per day.

”In October last year, the Owowo Field, located close to the producing ExxonMobil-operated Usan Field was found, and the Field’s location could allow for early production through a tie-back to the Usan Floating Production Storage and Offloading.


”The Field added current estimated reserves of one billion barrels to the national crude oil reserves.

”The corporation has grown the production of the Nigerian Petroleum Development Company (NPDC), NNPC’s flagship Upstream Company, from 15,000 barrels of oil per day to the current peak-operated volume of 210,000 barrels per day in June, 2017.

”The ownership of Oil Mining Licence, OML13, has been restored to NPDC following a presidential intervention, with first oil from the well expected before the end of the year.

”The confidence of the NNPC Joint Venture (JV) partners to pursue new projects has been rekindled following the repayment agreements for JV cash call arrears.

“The arrears were negotiated and executed for outstanding up to end 2015 by all the International Oil Company Partners,” Baru said.


He also said that gas supply to power plants and industries in the country had significantly increased.

Baru listed NNPC’s accomplishments during the period as completion of repairs of vandalized 20” Escravos-Lagos Pipeline System `A’ in August, 2016 which ramped up Chevron Escravos Gas plant supply from nil to 259 million standard cubic feet per day (mmscfd).

Another, according to him, is the completion of repairs of the vandalized Chevron offshore gas pipeline in February, 2017 which took the company’s gas supply to 430mmscfd.

He said that others were completion of repairs on vandalized 48” FOT export gas pipeline in June, 2017 and inauguration of NPDC’s Utorogu NAG2 and Oredo EPF 2 gas plants.

The GMD explained that the FOT export pipeline had reactivated shutdown gas plants, including Oredo Gas Plant, Sapele Gas Plant, Ovade Gas Plant, Oben and NGC Gas Compressors.


He said that the concomitant effect of the attainments was a significant growth in domestic gas supply in the last few months.

He added that during the period, domestic gas supply increased from average of 700mmscf in July, 2016 to an average of 1,220mmscfd currently, with about 75 per cent of the volume supplied to thermal power plants.

“A lot of Generation Companies, as a result, are rejecting gas due to the inability of Transmission Company of Nigeria to wheel-out the power generated”, Baru said.

He also said that since he resumed office, resources had been deployed to the Benue Trough, with exploration efforts commencing there in earnest.

”Seismic data acquisition is ongoing in the frontier region using the services of Integrated Data Services limited (IDSL) and her partners to pursue government’s aspiration to grow the reserves base of the country.


”Drilling activities are expected to commence in Benue Trough in the fourth quarter of this year.

”We are working with the security agencies for an early return to the Chad Basin.

”Drilling activities will be a priority on resumption while continuing with seismic data acquisition with improved parameters,” he projected.

In the downstream sector, Baru explained that NNPC had stabilized the market with sufficient products availability across the country through modest local refining efforts as well as Direct Supply Direct Purchase (DSDP) scheme.

According to him, the scheme has saved the nation about N40 billion in 2017.

“We have also commenced the resuscitation of our products transportation pipelines network, thus enabling us to move products to depots at faster rate and cheaper distribution costs to consumers.


”The Aba, Mosimi, Atlas-Cove and Kano depots have all been re-commissioned and are currently receiving products, thereby enhancing products availability across the country,” he said.

Baru said that under him, NNPC had improved capacity utilization of the refineries with the projection that they would attain supply of 50 per cent of non-gasoline white products, including diesel and kerosene, to the nation.

”After more than seven years of dormancy, the Asphalt Blowing Unit of the Kaduna Refining and Petrochemical Company (KRPC) was resuscitated to meet road construction needs in the country.

”Efforts are ongoing to secure third party financing to revamp the refineries to their full operational capacities,” he said.

He commended the corporation’s staff and industry’s in-house unions – Nigerian Union of Petroleum and Natural Gas Workers (NUPENG) and Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) for their support. (NAN)


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