Last week, the Senate and the House of Representatives passed the long-awaited Petroleum Industry Bill to the elation of Nigerians, especially stakeholders in the Oil and Gas sector. In the celebration that greeted the feat across the media, a critical but salient aspect of the story was left out.
That angle of the story has to do with what can best be described as the Mallam Mele Kyari factor. Not very many people know that the Group Managing Director of NNPC, Mallam Mele Kyari, was a member of sub-committee set up by the Corporation to work with the Oil and Gas Industry Committee (OGIC) that crafted the original draft of the PIB. He has been involved with the PIB from the very beginning. He worked closely with the Minister of State for Petroleum Resources, Chief Timipre Sylva, to provide Executive insight to the legislators all the while the Bill was undergoing legislative action.
So, the passage of the Bill, coming barely a week to his second year anniversary as GMD of NNPC, is another proof of the efficacy of his conciliatory leadership in the oil gas sector. For the past two years since he mounted the saddle of leadership in the NNPC, Mallam Kyari conciliatory approach has led to the resolution of many lingering thorny issues like the PIB. Barely four months in office in October 2019, Mallam Kyari stepped in the fray between Shell and the Belema Community and Belema Oil Ltd in Rivers State over OML 25.
Prior to that time, production had been shut-in for over three years over the dispute. But in pursuit of his vision to boost the nation’s oil production to 3million barrels per day, he stepped in and successfully resolved the dispute bringing back about 30,000barrels per day production. In late 2019, Kyari also led the Corporation to execute the Abo OML 125 Heads of Terms leading to the resolution of the issues around most of the deep offshore Production Sharing Contracts. This paved the way for the renewal of OML 125 and further investment in the exploration of the lucrative field to boost the nation’s crude oil production.
In May 2021, Mallam Kyari repeated a similar feat when he led the Corporation to sign a series of agreements with SNEPCo and other PSC partners to resolve the disputes around another deep offshore block, OML 118, leading to the renewal of that acreage with the prospect of a new $10billion investment in the development of the Bonga South-East Field. This will further boost the nation’s oil production. It is worth noting that the OML 118 dispute lasted over 12 years before Mallam Kyari stepped in. In just two years, Kyari’s conciliatory leadership knife has cut through seemingly irreconcilable and protracted disputes in the petroleum industry. This is a telling pointer to the lofty heights he is set to take the industry in the next few years when the PIB would have been signed into law.
Mallam Kyari’s leadership at the NNPC has also had a salutary effect on the gas sector giving a new vim to the gas commercialization programme and driving Nigeria to take its rightful place as a gas nation.
A major step in this regard was the dexterous handling of the Nigeria Liquefied Natural Gas Train 7 Project. Mallam Kyari led NNPC to rally the partner in the project to take the Final Investment Decision (FID) on the NLNG Train 7 Project in December 2019. The project was on the drawing board for over 10 years. The project is expected to generate over $20billion of revenue to the Government over the project’s lifecycle, 10,000 direct and 40,000 indirect jobs.
He followed that feat up in May 2020, at the heat of the Covid-19 pandemic, with the signing of the Engineering, Procurement and Construction (EPC) contract of the NLNG Train-7 project. The contract was signed with the SCD JV Consortium comprising affiliates of Saipem, Chiyoda and Daewoo.
The execution of the EPC contract signalled the effective commencement of the detailed design and construction phase of the multi-billion dollar project which, on completion, is expected to raise the NLNG production capacity by 35 per cent from the current 22 million tonnes per annum (MTPA) to 30 MTPA.
On 15th June, 2021, the ground-breaking ceremony of the NLNG Train 7 Project was conducted signaling the commencement of construction work on the project.
The GMD also led NNPC to flag-off the construction of the Ajaokuta-Kaduna-Kano (AKK) gas pipeline project on 30th June, 2020. The project which has been described by the President as a game-changer is an integral part of the Trans-Nigeria Gas Pipeline (TNGP) with a capacity to transport about 2.2billion cubic feet of gas per day.
The infrastructure designed to feed gas into the AKK – the Escravos Lagos Pipeline System II (ELPS II) and Oben-Obiafu-Obrikom (OB3) gas pipeline are also being aggressively executed and expanded to increase delivery capacity from 1.5BCF/D to over 3.5BCF/D. The ELPS II has reached 96.34 per cent completion. Mallam Kyari also led the Corporation to achieve a $300million reduction in the cost of the AKK Gas Pipeline contract via contract renegotiation from the initial $2.8billion.
Additional major stride in the gas sector was witnessed in the late 2020 with the commissioning of the Oredo Integrated Gas Handling Facility (IGHF) and the Liquefied Petroleum Gas Storage and Dispensing Unit. The facilities are wholly owned and constructed by the Nigerian Petroleum Development Company (NPDC) to address domestic gas supply challenges. The facilities currently deliver over 200 million standard cubic feet of dry gas per day and 330 metric tonnes of Liquefied Petroleum Gas (cooking gas) which is equivalent of 16 units of 20tonnes LPG trucks per day into the domestic market.
In order to provide an alternative to Premium Motor Spirit (petrol) as the sole automotive fuel and reduce the huge importation bill of the product, the GMD led NNPC to key into the Year /Decade of Gas initiative spearheaded by the Honorable Minister of State for Petroleum Resources to launch the Autogas initiative. It executed a JV agreement with NIPCO to help in the marketing and distribution of the product to get as many Nigerians as possible to migrate to the use of gas as automotive fuel.
Mallam Kyari heralded 2021 with a significant step in the direction of bringing the proposed Brass Gas Hub into reality. He led NNPC to take the Final Investment Decision (FID) with the Brass Fertilizer and Petrochemical Company for the $3.6bn Brass Methanol Plant in Odioma, Bayelsa State.
He followed that feat up a few weeks later with the signing of a $260m financing agreement for the Assa-North Ohaji South (ANOH) Gas Project with Seplat. The project will deliver 300 million standard cubic feet of gas per day and 1,200 megawatts of electricity to the domestic market.
On 22 April, 2021, NNPC executed a Gas Development Agreement (GDA) for the Oil Mining Lease (OML) 143 with its partner, Sterling Oil Exploration and Production Company (SEEPCO). The project will boost the nation’s gas production by 1.2trillion cubic feet (tcf).
Indeed, Mallam Kyari’s two years in the saddle have brought about a sea-change in the Nigerian oil and gas sector. Given the trajectory of developments under his watch, it is expected that by the time he is done, Nigeria would have become a truly gas-driven modern economy.