The Nigerian National Petroleum Corporation (NNPC) has said its repayment of the about $5 billion negotiated joint venture cash call debts owed to International Oil Companies (IOCs) over the years was now stirring the confidence of investors in Nigeria’s upstream oil sector.
It also said it would look inwards to rising domestic demands for oil as its biggest business opportunity following growing uncertainties in the global oil market.
NNPC’s Group Managing Director, Dr. Baru Maikanti, said while speaking on the theme “Investment in the Oil and Gas Industry” at the recently concluded 7th International Seminar of the Organisation of the Petroleum Exporting Countries (OPEC) in Vienna, Austria.
According to him, loan repayment was part of measures taken by the country to restore investors’ confidence in her oil industry.
He said so far, these measure which also included the execution of a $1 billion contractor financing deal with Schlumberger for the development of oil fields in the Niger Delta; aggressive investment in infrastructure; tripling of domestic gas supply from 500 million standard feet per day (mmscf/d) in 2010 to about 1500mmscf/d currently; and completion and commissioning of 600 kilometres of new gas pipelines, were paying off.
“We have had about $3.6 billion in investment so far. The PIB is undergoing serious legislative process. We segmented it into four and one has been passed. The downstream holds the future. We are looking at revamping our refineries and calling on investors to come and establish refineries. We are also looking at job creation across the entire value-chain,” Baru added.
He also said the corporation was working hard to keep the sanctity of all contracts so investors are given the right framework to operate.
According to him: “The recently sanctioned $2.8 billion, 614 kilometres Ajaokuta-Abuja-Kaduna-Kano (AKK) pipeline project is a demonstration of commitment to investing in local gas development.”
Baru, also stated that the NNPC has outlined plans to attract private investments, ensure sustainable development and spur growth in the nation’s oil industry.
He said more investment in the oil industry had become imperative in the wake of recent turbulence experienced in oil price cycle, supply-driven glut, world economic growth, uncertainties regarding oil’s future, and fiscal imbalance experienced by OPEC member nations.
He stated that the challenges have however created a new wave of opportunities for the NNPC to exploit since oil was expected to remain the dominant fuel in the energy mix, contributing between 52 and 53 per cent of the global energy requirement over the next 15 years.
According to him, the NNPC has recognised there could be an opportunity in oil demand growth, particularly as an exporter experiencing a surge in local demand.
“The balance of objectives requires that we undertake a paradigm shift in our business model to ensure that we attract capital and sustain flow of investment. It has also placed a burden for change towards broadening the base of investment sources outside traditional government funding.”
According to Baru, investors in Nigeria’s oil industry could benefit from reforms he said President Muhammadu Buhari, was implementing in the industry to ensure that the country has a stable policy, and clear off the environmental problems that discouraged investments.
Baru said NNPC’s goal to become a net exporter of refined products by year 2019 was on course as there are ongoing discussions to revamp all the four existing local refineries through utilising private capital in the form of a contractor financing model.