Since April 1, 1977 when it came into being, nigerian National Petroleum Corporation (NNPC) has been statutority given the mandate for the exploration and sales of petroleum and gas resources of the nigerian nation. For NNPC which supplies moe than 90% of nigeria's total export earnings, the responsibility has been a mammoth one.The crude oil production capacity is now at 2.5 million barrels per days.
Oil exportation
NNPC's involvement in exploration and production of oil has not been limited to participation in joint ventures alone. It has also set up its own exploration and production outfit know today as the nigerian Petroleum Development Company
(NPDC).
Oil market
The corporation has fashinned out strategies depending on the prevalent circumstances to move nigeria's crude oil effectively and efficiently in the international oil market. The corporation follows criticatly the trend in the international oil market in order to evolve the best strategy for selling the country's equity oil at the best possible price.
Diversifying petroleum industry
With refineries in Port-Harcourt, Warri and Kaduna, NNPC has also diversified into production of petrochemicals. Today, the corporation is producing petrochemicals in a number of plants at Ekpan near Warri in Delta State, Kaduna State and Eleme near Port Harcourt in Rivers State.
NNPC is unshaken in its resolve to expand the foreign exchange eaming potentials of the oil industry in nigeria.
 Strategy
 The NNPC Vision
NNPC will be a world class oil and gas company driven by shared commitments to excellence, customer satisfaction and continuous improvement.
The NNPC Mission
NNPC is a commercial, international corporation engaged in oil and gas activities utilising skilled manpower and current technology.
The nigerian National Petroleum Corporation (NNPC) came into being on
01 April 1977 resulting from the merger of the defunct nigerian National Oil Corporation
(NNOC) and the former Ministry of Petroleum Resources. The statutory instrument, Decree No. 33 of 1977 which established the corporation, created a public organisation that would, on behalf of the Government, adequately manage all nine (9) of the nigerian Petroleum industry. Such aspects as the exploration for crude oil and natural gas to their production and finally to their sale as crude oil and natural gas. The organisation is also in charge of the refining and processing of crude oil and natural gas as well as the production of petroleum products and other derivatives both for domestic and international consumption.
NNPC is also in charge of ensuring that petroleum products are transported to all the nooks and corners of the country, the production of petrochemicals and the provision of the needed raw materials for rapid agricultural and industrial development of the country. NNPC currently supplies more than 90% of the nigeria’s total export revenues.
The Corporation comprises a Corporate Head Office with six directorates and eight wholly owned subsidiary companies plus a number of subsidiaries in which the corporation holds majority shares. They are as follows:
nigerian Petroleum Development Company (NPDC) - wholly owned by NNPC
Integrated Data Services Limited (IDSL) - wholly owned by NNPC
nigerian Gas Company Limited (NGC) - wholly owned by NNPC
Warri Refining and Petrochemicals Limited (WRPC) - wholly owned by NNPC
Kaduna Refining and Petrochemicals Limited (KRPC) - wholly owned by NNPC
Port Harcourt Refining Company Limited (PHRC) - wholly owned by NNPC
Petroleum & Products Marketing Company Limited (PPMC) - wholly owned by NNPC
Eleme Petrochemicals Company Limited (EPCL) - wholly owned by NNPC
Hyson nigeria Limited (in affiliation with Calson (Bermuda) Ltd. - NNPC joint venture
nigerian LNG Limited - an NNPA/Shell/Elf/.Agip joint venture
National Engineering and Technical Company Limited (NETCO) - wholly owned by NNPC
The Head Office of the Corporation is made up of the following Directorates:
Corporate Services Directorate
Exploration and Production Directorate
Refining and Petrochemicals Directorate
Commercial and Investment Directorate
Engineering and Technical Directorate
Finance and Accounts Directorate
The Directorates are headed by Group Executive Directorates who report to the Group Managing Director.
UPSTREAM OPERATIONS
The production and export of crude oil has been the traditional focus of nigeria’s petroleum industry. For this sector, NNPC has been able to create mutually beneficial relationships with the oil-producing firms which have translated into increased revenues for the country. Up to 1982, nigeria enjoyed a boom in oil exports with revenues climbing to as much as $20 billion in 1980. By 1985 exploration virtually ground to a halt and there were hardly any seismic explorations being carried out. The situation was serious and NNPC had to look for ways to rectify the situation. Part of the reason for this decline in upstream operations was due to the fact that no attempt had been made to plough back any of the revenues made from oil into areas of research and development on ways to find more oil and gas.
NNPC took two steps towards rectifying the situation:
They asked the Government to use the Memorandum of Understanding (MOU) as an instrument of encouraging and attracting new investment in this sector in 1986. The MOU is a package of incentives designed to encourage oil firms to explore in order to find more oil.
NNPC also initiated the Joint Operation Agreement (JOA) which concretised the joint ventures between the government and the multinational oil producing firms recognising the need to commit the firms towards investing in the long term welfare of the industry. In 1991, the NNPC negotiated the working documents spelling out the responsibilities of the joint venture partners.
NNPC also opened acreage for exploration. Both nigerian entrepreneurs and foreign oil exploration and production companies were invited to bid for new concessions both in land sedimentary basins and nigeria’s offshore. Over 30 new concessions were given out in 1991.
Investment in deep off shore fields have also taken off and several new fields have been discovered on and off shore.
DOWNSTREAM OPERATIONS
The NNPC has always stressed the need to diversify the sources of revenue accruing to government from the petroleum, industry. Efforts have been taken, over the years, to increase the nation’s refining capacity, petroleum products distribution, natural and petroleum gas utilisation and petrochemicals developments projects.
Although there have been problems, on and off, with the nations refineries, NNPC has always tried to meet the demands of nigerians for the products and to have surplus for exports. Sadly, this has not always been the case. Today, the total refining capacity of the four refineries in Warri, Kaduna and the two in Port Harcourt is not as good as it was in the late 80s. However, the government is doing its best to service and maintain the refineries to make them operate at installed capacity.
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In order to make sure that all refined petroleum products are made available to the consumers, NNPC constructed a close-knit network of depots and pipelines all across the country. There is currently about 5,000 kilometres worth of pipelines and about 20 depots altogether in nigeria.
Other projects which the NNPC have engaged in include:
The Butanisation project with which NNPC popularised the use of liquefied petroleum gas (LPG), that is propane and butane.
The production of fuels and lubricating oils from crude oil
The production of petrochemicals such as plastic resins like polyethylene and polyvinyl, etc..
Two plants were established by NNPC in 1988 at Ekpan in Delta State to produce carbon black and another to produce linear alkyl benzene (LAB). The Eleme petrochemical plant produces polypylene and polyethylene and has considerably relieved the local plastics industry which was facing import problems.
NATURAL
GAS EXPLOITATION
To further diversify the nation’s revenue
base, the Corporation is pursuing vigorously a
number of Natural Gas Exploitation and Utilisation
schemes. nigeria’s known gas reserves are
said to be more than twice its crude oil reserves.
Today, the challenge facing NNPC is that of finding
industrialists to take advantage o this important
natural resource. On the domestic plane the Corporation
supplies gas for power generation to cement plants
in Shagamu and Ewekoro.
For the international market, NNPC is embarking
on the Liquefied Natural Gas project (LNG) in
collaboration with some foreign partners - Shell,
Agip and Elf.
An important item in the efforts of NNPC to broaden
the nation’s base in the development of projects
designed to add value to the country’s natural
gas resources. These projects involve extraction
of exportable chemicals such as Natural Gas Liquids
(NGLs), Methanol and Methyl Tertiary Butyl Ether
(MTBE) and Liquefied Petroleum Gas (LPG) from
natural gas.
In furtherance of the spirit of ECOWAS (the Economic
Community of West Africa States), NNPC embraced
the West African Gas Pipeline concept conceived
by the World Bank as a means of meeting the energy
requirements of Ghana, Togo and Benin Republic
by supplying them with natural gas from nigeria
on purely commercial terms. The first phase of
this project is to supply these three countries
about 50 million standard cubic feet of gas per
day by the year 2000. This is expected to increase
to about 160 million standard cubic feet by 2018.
From all we have seen , NNPC, The Investment Giant
is a company driven by the intent to profitably
explore, develop, produce, process and market
crude oil and refined petroleum, their by-products
and derivatives, at competitive prices, both at
home and abroad.
INTERVIEW
WITH
MR BAYARO
MD/CEO OF nigeriaN NATIONAL PETROLEUM CORPORATION,
nigeria .
February 3rd, 1999
FORBES: The oil revenue represents 70% of the
nigerian state budget and nigeria is one of the
biggest producers and exporters of oil. How do
you foresee the nigerian oil sector in five years’
time?
BAYERO: Well, five years’ time? My programme
is within a term of about 10years. We have our
programme under Vision 2010 in which we outline
our development within that time period. Within
that period we hope to see for instance oil production,
the oil reserve rise to about 40 billion barrels
and our approximation during that period is planned
to be about 4 million barrels per day in terms
of gas. What we intend to do is to intensify our
efforts at utilizing the resources that we have
in the country for oil production and in that
connection we hope to see maybe another LNG plant
of the same capacity as we have now. We have to
intensify our effort in building more NGL plants.
Right now we have about 3 or four and of course
we have to see industries utilizing gas instead
of diesel fuel, oil or any other energy source.
Generally, we have see greater our utilization
of gas at the domestic level, so within that period
may be you will see a lot of fertilizer plants,
more petrochemical plants with gas as base-material.
That is what we want to see in the next ten years.
FORBES: One of the major issues now is the
privatization programme. Is NNPC going to be involved
or is it going to remain under the Golden Crown?
BAYERO: Yes, we have been in support of privatization
for the last seven years. It is there on record
that we have been advising government to privatize
some of our subsidiaries. It may interest you
to know that we are going ahead without even a
prompt from government. We have privatized two
of our subsidiaries, N.P.D.C. which is the nigeria
Petroleum Developing Company, and N.G.C which
is the nigeria Gas Company. These are 100% subsidiaries
of the NNPC. We have gone ahead along with one
American Company in preparing the documents to
privatize these two companies and the memoranda
of information are being prepared. So, we are
in support of privatization and we know that it
will bring a lot of benefit to the nation, and
the industry and at the same time the NNPC, by
bringing expertise and efficiency in our operations.
FORBES: And you are already collaborating with
some American investors, you are in Joint Ventures
with Chevron and Mobil, Shell and other multi-national
lines. What are the main advantages that NNPC
is having by doing these joint ventures. How do
you see the American approach to the nigerian
market?
BAYARO: The most important benefit we have from
these Joint Ventures actually is what we derive
in terms of exposure, training and also development
of our Human Resources. That is mostly the benefit
we get. But apart from those of course these sorts
of arrangements also bring about some efficiency
in our operational areas.
FORBES: One other thing about the gas, which
is one of the major projects that you are into
to increase revenue for nigeria. So you have plans
to diversify into future gas export especially
as you were saying that LNG will be privatized.
BAYARO: Yes I mentioned another L.N.G plant and
a number of NGL plants, apart from that we will
embark on laying pipelines, distributing gas within
the country, nigeria. As at now for instance TEXACO,
NNPC and other interested investors from Germany
are to lay a six thousand-kilometer pipeline and
that will bring industries, to different parts
of the country.
So we have that plan, ours is a diversion plan
fertilizer, building independent power plants,
and it is one of the biggest pipeline projects
to supply other West African countries, like Ghana,
Ivory-Coast. Then we have another plan, which
could go southward to Cameroon, Zaire, Namibia
even to South Africa. So we have all these lofty
ideas.
FORBES: Then on a final note, as a major player
in the nigerian economy, what is your message
for investors wanting to come into nigeria to
participate in the oil sector of the economy?
BAYARO: I can say that in the oil sector, there
are a lot of opportunities, apart from crude oil
itself, a lot of opportunities in the gas sector
and as you know, we have a huge gas reserve. In
fact nigeria’s current gas reserve will take
us maybe for another 150 years, while current
oil-reserve estimate will take us for over 30-40
years. So we have a lot of gas and I see the future
for investors in gas.
FORBES: Now, on a personal level, what has
been your greatest achievement since you and your
team took over the management of NNPC?
BAYARO: Well, I can say that retraining the people,
giving them more exposure and developing their
skills. This is one of the achievements. And of
course you know the problem we are being faced
with in the energy sector, oil sector, particularly
provision of petroleum product. We now hope that
based on the effort we have put in, in the last
two or three years we are getting out of it. The
refineries will come back to life after they have
been in such a terrible state for so many years.
We are investing something like 214 million dollars
to refurbish the Kaduna refinery, we are spending
another 189 million dollars to refurbish and rehabilitate
the Port Harcourt refinery, we are spending another
150 million dollars to rehabilitate the Warri
refinery. On top of that we spending 100 to 120
million dollars on a number of pipelines and depots
scattered around the country.
We have about 5,000 kilometers of pipeline distribution,
we have about 22 depots with pipelines spread
East, West, North and South. So I think we have
achieved a lot… and another thing, we have
opened up a depot shop… that is were the
action is for now.
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