Dr. Maikanti Baru, GMD, NNPC

NNPC SET TO ESTABLISH 200,000BPD CONDENSATE REFINERIES

The Nigerian National Petroleum Corporation will establish two condensate refineries with a total refining capacity of 200,000 barrels per day at Western Forcados Area and Assah North Ohaji South (ANOH) Areas of Delta and Imo States respectively.

Natural-gas condensate is a low-density mixture of hydrocarbon liquids that are present as gaseous components in the raw natural gas produced from natural gas fields.

NNPC Group Managing Director (GMD), Dr. Maikanti Baru, made the disclosure at the bid opening for the provision of consultancy services to carry out a feasibility study for the refineries, saying that the establishment of the green refineries was part of the strategies to eliminate importation of petroleum products and guarantee energy security for the country.

Baru stated clearly that the condensate refineries, when fully operational, would increase gas supply to power plants in parts of the country.

The NNPC GMD noted that the condensate refineries which would operate along the NLNG model would increase the nation’s revenue base, provide jobs for the people and save for the country a lot of foreign exchange.

He added that the strategic initiative would increase the energy security for the nation and grow the NNPC refining capacity from 445,000 barrels per day to 645,000 barrels per day.

Dr. Baru pointed out that “The condensate refineries are going to be fully on commercial basis and we intend to get partners that would invest. We are willing to get partners and operate in a similar manner with NLNG model where we could just get a majority share but not a controlling share.”

This model he said would allow the private sector to have the confidence to drive the plants and ensure that the bureaucracy that is involved in government business is out of it.

He said that when the implementation of the Petroleum Industry Governance Bill (PIGB) becomes fully operational, the National Petroleum Company (NPC) would be steady as it would be governed by the Companies and Allied Matters Act (CAMA).

Dr. Baru affirmed that the initiative was in line with the overall objectives of the Federal Government to grow the economy to 7 per cent of Gross Domestic Product (GDP) by 2020 through the Economic Recovery and Growth Plan (ERGP). He said the target of the NNPC was to ensure sufficient power and fuels are available to drive the growth in the economy, adding that the bid opening was the first step to realizing the condensate refineries ambition.

“It is a great day for me and NNPC and am happy that we have got some bids from companies who are willing to carry out the feasibility study for the NNPC,” Dr. Baru enthused.

The NNPC boss was of the view that the refineries would stem the incidences of pipeline vandalism, stressing that the refineries would also be an opportunity for the nation to restart the Aviation Turbine Kerosene (ATK) production.

In his presentation entitled: Unveiling NNPC Condensate Refinery Strategy, the Group General Manager, Corporate Planning and Strategy, Mr. Bala Wunti, said the move was a strategic step that would preserve the NNPC market share at the upstream, midstream and downstream sectors of the nation’s hydrocarbon value chain.

He added that the bid opening was a history making opportunity that was geared towards securing the future of the corporation.

On his part, the Manager, Supply Chain Management of the NNPC, Engr. Sandy Heman, said the public bid opening was sequel to the 2007 provisions of the Public Procurement Act.

The highpoint of the event was the unveiling of the bids by Dr. Baru in the presence of the bidding companies, Nigeria Extractive Industries Transparency Initiative (NEITI) and other Non-Governmental Organizations (NGO)

 CHINESE NATIONAL OIL COMPANY GUARANTEES FUNDING FOR NNPC’S AKK PROJECT

China National Petroleum Corporation (CNPC) has assured the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, of its unflinching commitment towards securing funding for the successful financing and subsequent execution of the Ajaokuta-Kaduna-Kano (AKK) pipeline project.

The huge boost for the project was revealed during a high-level meeting between the NNPC and CNPC Management held on the sidelines of the Forum on China-Africa Cooperation (FOCAC) Summit in Beijing.

The AKK gas pipeline would enable connectivity between the East, West and North that is currently non-existent. It would also enable gas supply and utilization to key commercial centres in the Northern corridor of Nigeria with the attendant positive spin-off on power generation and industrial growth.

Financing for the 40-inch x 614km AKK gas pipeline is expected to cost about $2.8bn, for the project described as the single biggest gas pipeline in the history of oil and gas operations in Nigeria.

While 85% of the money is expected to be funded by the financiers which include Industrial and Commercial Bank of China (ICBC), Bank of China, and Infrastructure Bank of China with Sinosure, China’s Export Credit Agency (ECA) providing insurance cover, the remaining 15% will be provided by the contractors which include Oilserve/Oando consortium, as well as Brentex/China Petroleum Pipeline (CPP) Bureau consortium.

Speaking on behalf of over six CNPC subsidiaries at the meeting, the Assistant President and Board Member of the CNPC, Mr. Wang Shihong, said his compnay placed a very high premium on the AKK Project, describing it as the beginning of several collaborations between both corporations.

According to Shihong, “We are in full support of Nigeria’s quest to deliver the AKK project. We are working relentlessly towards securing funding for the project based on regulations and policies of Chinese financial institutions.”

Shihong, who said that the CNPC cherished its relationship with the NNPC, also pledged to fully support his company’s subsidiary, CPP Bureau, partner in the AKK Project, to ensure success of the initiative.

Responding, Dr. Baru stated that the AKK Project was dear to Nigeria, adding that while at the FOCAC Summit, President Buhari reiterated the potentials of the project to strengthen Nigeria-China relations.

He added that the NNPC was looking forward to a successful close-out of the project’s financing towards official ground-breaking ceremony in October, this year.

“We want to maximize the construction work before the end of the year. We are hoping for the quick resolution of the financing agreements so that we will kick-start the project in October, when the dry season begins,” Baru added.

Also speaking, Executive Vice Chairman of Brentex, one of the contractors handling Lot 3 of the project, Mr. Sani Abubakar, said since signing the Engineering, Procurement & Construction (EPC) Contract, tremendous progress had been made towards securing financing for the project.

He particularly commended Dr. Baru for driving the project, adding that following his leadership, some of the elements that were not part of the process were brought in, including providing financing for early works.

On his part, the Chairman of Oilserve, one of the contractors handling Lot 1 of the project, Dr. Emeka Okwuosa, said they had already gone into some agreements with Brentex/CPP consortium on financing, which in the end, will bring the project under a single financing arrangement.

TINUBU BEMOANS ADVERSE IMPACT OF SUBSIDY

 After incessant fuel scarcity in Nigeria’s downstream sector for almost five years due to subsidy of Premium Motor Spirit (PMS), which most operators have argued not to be market friendly owing to huge cost of importation, operators have reacted to the recent trend in the sector.

At present, there is respite in the sector with no vehicle queues on Nigerian roads. The situation seems palatable to the citizenry, but most operators have expressed dismay on the issue that has prevented many of them from importing the products due to huge operational cost.

The Chief Executive Officer (CEO) of Oando, Wale Tinubu, made it known that Nigerian government cap on PMS prices at below-market costs has caused many private retailers to stop imports and paving way for Nigerian National Petroleum Corporation (NNPC) to handle supply and effectively subsidise the product for Nigerians.

According to the Oando boss, “It’s not popular to increase petrol prices, the reason we don’t have a country that is exporting petroleum products is because of subsidies. Our refineries were never repaired because they never had enough cash flow to fix them. That’s because they were always selling product at a discount.”

PMS is sold for N145 per litre in Nigeria which makes the country one of the ten cheapest places in the world to buy the product without allowing the forces of demand and supply to determine the price through market forces.