The Nigerian National Petroleum Company Ltd had cleared the $3.8bn cash call indebtedness to its Joint Venture Partners.
The NNPC Ltd Chief Upstream Investment Officer, Mr Bala Wunti, said this while speaking as a discussant at the ongoing fourth Nigerian Oil and Gas Opportunity Fair being held in Yenagoa, Bayelsa State.
Wunti spoke at the first opportunity session focused on Upstream opportunities.
In 2016, the NNPC signed a cash-call repayment agreement with its JV partners to defray cash-call arrears within five years after many years of its indebtedness to its partners.
During this period, it had experienced challenges to meet its cash calls obligations and indebtedness, to the IOCs JVC partners, a situation the operators said caused a loss of new investments in the Nigerian petroleum sector
But speaking at the event, Wunti said the NNPC Ltd and its partners have successfully confronted a trilemma of challenges and are poised to increase national production output and usher in a new era of growth and opportunities in the Nigerian Upstream Oil and Gas Industry.
Wunti dwelt on the successes recorded in the last twelve months as a panacea for the growth and unlocking opportunities in the Nigerian Upstream Oil and Gas Industry.
In his address, after painting the global scenario of energy transition versus energy security and the effects on the global energy supply chain, he established the nexus between the challenges faced by the Nigerian Oil and Gas Industry prior to the 2022 production output dip, the response to the challenges, and the implications for the Nigerian economy.
He said, “We have seen the worst, lessons have been learnt, and the solutions are being institutionalised to ensure we never see a repeat.”
Leading up to the production output dip in 2022, a trilemma of challenges confronted the industry.
He said there were uncertainties around fiscals, security challenges, and upstream cost of production.
According to him, the enactment of the Petroleum Industry Act (PIA) 2021 and its implementation effectively ended the fiscal uncertainties and empowered the newly established institutions to discharge their mandates effectively.
A major talking point in the industry has been the remarkable achievement by NNPC Ltd. through NUIMS to clear huge backlogs of Cash Call debt, over $3.8bn owed to Joint Venture (JV) partners.
Wunti said under the guidance of forward-thinking leadership and a series of strategic initiatives, NNPC Ltd. leveraged its financial autonomy derived from the PIA to work out and execute a payment plan for the cash call debt while balancing its energy security obligations to the nation.
This, he added, re-energised the JVs to recalibrate their focus towards sustaining production and increasing their spending to procure the necessary services required to do so.
He explained further that the response to the security challenges was deploying the industry-wide security architecture, adding that the NNPC Ltd sought and obtained Presidential approval to rally stakeholders to implement a holistic hydrocarbon infrastructure security architecture to tackle the issue of crude oil theft and vandalism of oil and gas assets.
As designed and operationalised, he said the architecture comprises Government Security and Intelligence Agencies (GSIAs) supported by Private Security Contractors (PSCs) drawn from the Host Communities with vast knowledge of the terrains and the Communities.
The security operations are monitored and coordinated from a central command and coordination centre that leverages state-of-the-art technology to detect illegal activities and escalate to the front line for swift response in a timely, cost-efficient, and effective manner.
Barely fourteen months after the initiative’s launch geared towards detecting infractions, deterring, responding, and recovering, Wunti said the results have been nothing short of remarkable.
To address the Upstream Production Cost, he stated that the Nigerian Upstream Cost Optimization Program (NUCOP) was launched to bring synergy amongst upstream payers in the Country to drive down costs.
“Progress has been recorded with improvements in the contracting cycle and co-sharing of services amongst upstream operators,” he added.
In rounding up his remarks at the opportunity session, Wunti stated that the drive to broaden local content and develop capacity in the upstream industry is non-negotiable.
He urged all stakeholders not to relent as the opportunities abound, and many more are lined up with an expected uptake in drilling activities, demand for line pipes, and consumables essential for growing production output.
He said economic and social benefits will accrue to the nation for every incremental barrel of production as the industry is central to our economy.
With the colossal cash call debt burden settled and a sustainable framework to ensure timely payments going forward, he added that partner allegiance has been restored.
In addition, he said a firm industry-wide security arrangement is in place, as well as the resolve to drive down the cost of production; noting that the focus has shifted towards consolidating on gains to raise production output to 1.8 million barrels per day in July 2023 and spur growth to achieve a target of 2 million barrels per day by December 2023.
This, he added, represents massive opportunities for all stakeholders, noting that direct and indirect jobs will be created, contractors and suppliers will get busier, and the benefits will transcend beyond the industry to other sectors of the economy.
In his address at the event, the NNPC Group Chief Executive Officer, Mele Kyari urged all stakeholders to join the NNPC in growing crude oil production.
He said with the coming onstream of Dangote Refineries, the NNPC will be supplying 300,000 barrels of crude oil per day to Dangote.
He said, “We want to address the energy challenges so that industrialization can come to the country. 48 per cent of all revenue that comes to government comes from the oil and gas sector and we are in a very good position to support the growth of the economy.”