PlA: NNPCL/NUIMS leverage financial autonomy, clear huge backlog of Cash-Call debt owed Joint Venture partners

by Per Second News
5 minutes read


“NNPC Ltd charts the path to consolidating gains, maximising capacity, unleashing potential, and spurring growth while igniting the optimism of stakeholders by providing updates on triumph over adversity in recent months’’

The Group Chief Executive Officer of Nigerian National Petroleum Company Ltd (NNPCL), Mallam Mele Kyari, has led a team of the company’s executive officers to the 4th edition of the Nigerian Oil and Gas Opportunity Fair held at Yenagoa, Bayelsa State capital, showcasing opportunities to captains of the industry.

ln a keynote address at the occasion, Kyari unveiled the numerous opportunities in the Nigerian oil and gas sector, urging partners to be deliberate about growing the gas footprint while drawing a nexus between energy availability and economic prosperity.

He said:“With the sustained drive to attain the milestones of 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, more opportunities are in the pipeline.’’

Persecondnews reports that 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.

One of the 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 US$3.8 billion owed to Joint Venture (JV) partners.

Bala Wunti

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, by no small means, re-energised the JVs to recalibrate their focus towards sustaining production and increasing their spending to procure the necessary services required to do so.

Also speaking as a discussant at the fair, the NNPCL Chief Upstream Investment Officer, Mr Bala Wunti, gave key updates to investors and stakeholders alike highlighting Upstream opportunities.

He said the successes recorded in the last 12 months were a panacea for growth and unlocking opportunities in the Nigerian Upstream Oil and Gas Industry.

After painting the global scenario of energy transition versus energy security and the effects on the global energy supply chain, Wunti 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.

“We have seen the worst, lessons have been learnt, and the solutions are being institutionalised to ensure we never see a repeat,’’ Persecondnews quotes him as saying.

“Leading up to the production output dip in 2022, a trilemma of challenges confronted the industry. These were uncertainties around fiscals, security challenges, and upstream cost of production.

“The response to the security challenges was deploying the industry-wide security architecture. 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, 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 14 months after the initiative’s launch geared towards detecting infractions, deterring, responding, and recovering, the results have been nothing short of remarkable.

Wunti said to address the Upstream Production Cost, the Nigerian Upstream Cost Optimization Program (NUCOP) was launched to bring synergy among 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.’’

While stating 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 explained: “Economic and social benefits will accrue to the nation for every incremental barrel of production as the industry is central to our economy. Key elements are in place to sustain the current trajectory with the colossal cash call debt burden settled and a sustainable framework to ensure timely payments going forward, a firm industry-wide security arrangement in place, and the resolve to drive down the cost of production.

“This, no doubt, represents massive opportunities for all stakeholders. 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.’’

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