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NNPC mulls recourse to capital market funding

NNPC mulls recourse to capital market funding

Gas supply to power hits 2-yr high

UGO AMADI

The Nigerian National Petroleum Corporation (NNPC) is set to hit the Capital market to fund its new projects which include the NNPC/NAOC JV Idu-Re-development, South Gas Project, North Gas Project and Central Gas Project.

Group Managing Director of the corporation, Dr. Maikanti Baru, made this disclosure at the ongoing Nigeria Oil and Gas Strategic Conference and Exhibition (2018 NOG) in Abuja.

With the theme: “Driving Nigeria’s Oil and Gas Industry Towards Sustained Economic Development and Growth”, Dr. Baru explained that funds from the Capital market would also be used to develop the NNPC/TEPNG JV’s Ikike Project, NNPC/SPDC JV Southern Swamp and Associated Gas Solution Step 2 Project, among others.

“We intend to sanction the Multibillion US Dollars Bonga South West/Aparo (BSWA) project as soon as we conclude an agreement on the Heads of Terms with SNEPCO on the various pending PSC Arbitration disputes. This will jump start the resolution of all the other PSC Arbitration Disputes,” Dr. Baru informed.

Dr. Baru said the current daily domestic gas demand had attained an unprecedented level of 4,000 million standard cubic feet of gas per day which is still expected to grow exponentially to about 7,500mmscfd in the next five years.He stated that within next three years, NNPC, in collaboration with its Joint Venture partners, was committed to increasing natural gas availability from 1.5bscf/d to about 5billion standard cubic feet per day in 2020 to generate up to 15GW of electricity as well as stimulate gas-based industrialization.

Dr. Baru posited that the Corporation would continue to progress with its Seven (7) Critical Gas Development Projects (7CGDP) which has also been established to deliver about 3.5bscfd of gas to the domestic market by 2020.He reiterated that the NNPC had sanctioned the $2.8billion 614Km Ajaokuta-Kaduna-Kano (AKK) pipeline project as a demonstration of its commitment to developing structured gas architecture across the length and breadth of Nigeria as part of NNPC’s priority in the medium to long term.

In the Midstream, Dr. Baru submitted that there were ongoing discussions to revamp the four local refineries by utilising private capital in form of Contractor-Financing model, adding that this represents a shift in NNPC’s investment model, redefining the commercial framework for midstream investment in Nigeria.

“Within the new model, investors would be repaid from incremental production of the refineries on prior agreed terms”, Dr. Baru explained.Dr. Baru said the NNPC believed that the downstream sector holds the future, saying that the plan to become a net exporter of refined products by year-end 2019 is on course.

Thee GMD maintained that the outlook for 2018 and beyond for the NNPC was to increase crude oil reserves by 1billion barrels year-on-year from the current 37billion barrels to 40billion barrels by 2020 and also increase National oil daily production to 3million barrels per day.He assured that the Federal Government would continue to emplace policies that would grow production volumes and reduce contract approval time to guarantee efficiency in the petroleum sector.

On his part, the Secretary General of the Organisation of the Petroleum Exporting Countries (OPEC), Dr. Mohammed Sanusi Barkindo, stated that the landmark “Declaration of Cooperation,” by 24, now 25 oil producing nations has accelerated the stabilization of the global oil market through voluntary production adjustments of around 1.8 mb/d.

He explained that the 174th Meeting of the OPEC Conference and the 4th OPEC and non-OPEC Ministerial Meeting had reaffirmed the partners’ resolve to act in the interests of producers and consumers, stating that participating countries agreed to a 100 per cent conformity level.In another development, NNPC has announced the attainment of a two-year record spike in gas supply to power generation, which hits 854.40million Standard Cubic Feet of gas per day (mmscfd) for March 2018, translating to an equivalent power generation of 3,492MW.

Details of the March 2018 National Gas Production figures contained in the Monthly NNPC Financial and Operations Report for the period indicated a total national gas production of 253.06 Billion Cubic Feet (bcf), averaging 8,163.58mmscfd.Period to date Production from Joint Ventures (JVs), Production Sharing Contracts (PSCs) and Nigerian Petroleum Development Company (NPDC) amounted to about 69.82 per cent, 21.95 per cent and 8.23 per cent respectively.

A breakdown of natural gas off-take, commercialization and utilization showed that out of the volume of gas supplied in March 2018, a total of 152.60 bcf of gas was commercialized, comprising 40.52 bcf and 112.08bcf for the domestic and export market respectively.

This, the report says, translates to a total supply of 1,307.09mmscfd of gas to the domestic market and 3,615.62mmscfd of gas supplied to the export market for the month.The report said 59.92 per cent of the average daily gas produced was commercialized while the balance of 40.08 per cent was re-injected, used as upstream fuel gas or flared.

“Gas flare rate was 10.55 per cent for the month of March 2018, that is, 867.10mmscfd compared with average Gas flare rate of 10.24 per cent or 804.14mmscfd for the period March 2017 to March 2018”, the report said. The rise in flare rate being a function of spike in gas production during the month.

The monthly report stated that about 3,236.82mmscfd or 89.52 per cent of the export gas was sent to Nigerian Liquefied Natural Gas Company (NLNG) Bonny for March 2018 compared with the period (March 2017 to March 2018) average of 3,122.92mmscfd or 90.64 per cent of the export gas.

In the downstream sector, NNPC continued to ensure increased petrol supply and effective distribution of the product across the country.The report said that in March, 2018, 2.49bn litres of petrol were supplied by NNPC, translating to 80.26million litres per day to sustain seamless distribution of Petroleum Products and zero fuel queue across the nation.

The monthly Financial and Operations report explained that NNPC was keeping an eagle eye on the daily Premium Motor Spirit (PMS), or petrol evacuation figures from depots across the nation, with, where necessary, the support of the Nigerian Customs Service (NCS) through existing Joint Monitoring Team.According to the report within the period under coverage, pipeline break stood at 224, of which 25 pipeline points either failed to be welded or ruptured/clamped.

“Thus, 199 pipeline points were vandalized as against 125 recorded last month”, it stated.PHC-Aba and Aba-Enugu pipeline segment accounted for 177 points or 88.94 per cent of the affected pipeline points, the report revealed.The March 2018 edition of the Monthly NNPC Financial and Operations Report is the 32nd in the series.

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