With Little to Show, Kyari Gifted New Tenure - Africa’s premier report on the oil, gas and energy landscape.

With Little to Show, Kyari Gifted New Tenure

By the Editorial Board of Africa Oil+Gas Report

With the approval of a new board and management team of the state hydrocarbon company, the Nigerian President Bola Tinubu, has effectively given a vote of confidence on Mele Kolo Kyari, NNPC Ltd’s Group Chief Executive Officer.

Mr. Kyari has been the company’s CEO since July 2019. His over four years on the job is the longest that anyone has spent in the cushiest office in the Nigerian oil industry since the country’s return to democracy in 1999.

The statement from President Tinubu’s spokespersons notes that the appointments were with effect from December 1, 2023, in compliance with Section 59 (2) of the Petroleum Industry Act (PIA) 2021.

This means a tenure of five years for Mr. Kyari and Umar Isa Ajiya, the NNPC Ltd’s Chief Financial Officer.

A geoscience graduate of the University of Maiduguri, Mr. Kyari did his mandatory youth service as a well site geologist at the defunct Directorate of Foods, Roads and Rural Infrastructure (DFRRI), then briefly worked at the Nigerian Geological Survey Agency. He has since spent 32 years in the NNPC system, from when he was employed as a Processing Geophysicist with Integrated Data Services Limited, a subsidiary of the NNPC, in 1991.

Mele Kyari’s end of tenure has been a source of speculation all over the hydrocarbon industry. And the conversations were always hinting at the likelihood of the new-on-the-job President Bola Tinubu easing him out.  Names like Mofe Boyo, Deputy Group Chief Executive of Oando PLC and Adeyemi Adetunji, the recently retired Group Executive Director (Downstream) NNPC have been paraded by all kinds of groups on social media platforms, as being in clear line of sight to Mele Kyari’s seat.

Just before the November 27 announcement keeping Kyari in office, there was a widely distributed report that Gbenga Komolafe, chief executive of the Nigerian Upstream Petroleum Commission (NUPRC) was on course to take over from Kyari. The problem with this line is that the NUPRC, the major beneficiary of the Petroleum Industry Act (PIA), is far more influential and powerful in the new law than the NNPC. The PIA is a regulator’s law, period. The NNPC job controls more budget and therefore, commands a lot of fire power, but every company is regulated by the NUPRC and even the minister no longer has the discretion to allocate acreages, while bid rounds and ministerial consent can only be approved on the advice of the NUPRC.

A major criticism of Kyari is that he is an ethnic bigot, who favours business enterprises and entities from northern Nigeria over the south. That agenda suited the temperament of Muhammadu Buhari, Nigeria’s last president, the criticism goes. It so happens that most of the producing acreages sold by Shell, Chevon and ConocoPhillips in the last 12 years were purchased by business entities from the south of the country. If Kyari could help northerners in some redistribution, why not? This is the context in which NNPC’s invocation of its right of first refusal over Chevron’s sale of its stakes in OMLs 86/88 is seen to have played out. Mike Adenuga’s Conoil, an oilfield operator of over 30 years’ experience had won the purchase of the assets, but NNPC took it and proceeded with a Finance and Technical Service Agreement which benefited MRS, a downstream company with no upstream experience, owned by the Dantatas, a family of northern Nigerian businessmen.

But there has also been talk that Mr. Kyari spent a lot on Mr. Tinubu’s election campaign, too much, the whispering goes, for him to be readily discarded. Africa Oil+Gas Report could not prove these speculations.

Mr. Kyari is a smooth-talking executive with a bluster, who rattles off lists of big projects that NNPC is supposedly doing, except that most of the projects are never delivered.   On his watch for four years, the 127-kilometre Obiafu-Obrikom-Oben (OB3) gas pipeline, under construction since 2012, still hasn’t been completed. Neither has the looping of the Escravos-Lagos Gas Pipeline (also under construction for 11 years), nor the installation of a mid-line compression facility on the 439kilometre long pipeline, been completed.

The collective production of joint ventures in which NNPC is the majority partner decreased under Mr. Kyari’s superintendence, which is how the nation’s output has been on the downhill trajectory for the four years. Nigeria averaged 1.494Million Barrels of Oil Per Day (MMBOPD) In 2020, Mr. Kyari’s first full year in office. The nation’s crude output slipped to 1.197MMBOPD in 2021 and 1.186MMBOPD in 2022, according to data from NUPRC.

Mr. Kyari made a big show of presenting an annual report

The acreages taken by government from operators and handed over to NNPC for management in the last four years, including Shell’s Oil Mining Lease (OML) 11, Pan Ocean’s OML 98 and Addax operated OMLs 123/124 and 126/137, have not seen any increase in output. The point is, whatever you may say about Mr. Kyari, he doesn’t seem to be focusing on delivering more of the crude oil-locked behind pipes- into terminals.

Mr. Kyari has continued NNPC’s use of the nationalism card to elbow out private operatorship of assets. His attitude is in a large part responsible for the struggle in the transition from IOCs, who are clearly leaving Nigeria and local independents who are to take over.

In the 17 months that NNPC has held up the deal for the purchase of ExxonMobil’s four shallow water acreages by Seplat Energy, the gross output in those assets, as indicated by the volumes of crude and condensates received at the company’s two terminals (Qua Iboe Terminal and Yoho FPSO), have declined by 12%. Our assumption here is that Seplat, an aggressive operator, would certainly have brought new energy to the ExxonMobil portfolio and halted the output decline, even if it doesn’t immediately boost it.

Of the so called seven critical gas development projects (7CGDP) Kyari inherited from (his predecessor) Maikanti Baru, only the Asa North -Ohaji South (ANOH) project is anywhere under construction and even then, the ANOH could have been commissioned 18 months ago, but for the non-availability of the OB3, pipeline (a situation caused by NNPC’s drawn out work on the project) into which the gas from ANOH is expected to be pumped en-route to the market.

The six other projects in the 7CGGDPs (including the 6.4 TCF Unitized Gas fields:

  • Samabri-Biseni, Akri-Oguta, Ubie-Oshi and Afuo-Ogbainbri fields;
  • 600Million standard cubic feet of gas per day (600MMsc/d) gas facilities on NPDC/FHN, NPDC/Shoreline, NPDC/Neconde in OMLs 26, 30, 42;
  • 400MMscf/d Awoba/Alakri(OML18, 24) project;
  • Cluster development of 5 TCF of gas in OML 13 to support the expansion of Seven Energy Uquo Gas Plant;
  • Chevron Nigeria Limited’s OML 49 Makaraba Cluster Development;
  • 2 TCF SPDC JV Gas Supply to Brass Fertilizer Company; and
  • OML 13 Cluster Development and Cluster Development of 10 TCF Okpokunou/Tuomo West (OML 35/62);

These are all are stuck somewhere between unending negotiations, field studies and FEEDs.

Keeping ANOH on hold because of the technical difficulty in delivering the OB3 Pipeline amounts to a chokehold on the economy, we have noted here before.

It could be argued that the takeoff of the remaining gas projects are collective responsibilities of NNPC and its partners, and NNPC cannot be blamed wholesale for their rolling into the back of the burner, but it is Mr. Kyari and his colleagues who keep coming out in public claiming these projects as if they own them and they might as well take the blame.

We have deliberately focused on the technical deliverables of Mr. Kyari’s tenure, because he is a trained geoscientist, and geosciences, not reservoir engineering or drilling or facility engineering or finance or community engagement, is the heart of the E&P business. If the geoscientist doesn’t see it, it won’t even start in the first place. And the geoscientist is everywhere as long as it is upstream; from the discovery to development to continued field optimization to abandonment.

This article is part of the public service practice of Africa Oil+Gas Report.

The Africa Oil+Gas Report is the primer of the hydrocarbon industry on the continent. It is the market leader in local contextualizing of global developments and policy issues and is the go-to medium for international corporations, local entrepreneurs, technical enterprises or financing institutions, for useful analyses of Africa’s oil and gas industry. It has been published by the Festac News Press Limited since November 2001, and, since the COVID -19 season, as a monthly digital (pdf) publication, delivered to subscribers around the world. Its website remains www.africaoilgasreport.com and the contact email address is info@africaoilgasreport.com. Contact telephone numbers in our West African regional headquarters in Lagos are  +2347062420127, +2348036525979, +2348023902519.

 

Share Article


Sponsored

3 comments

  1. KC IKWUAKOR says:

    Excellent reporting!
    I had always thought that Nigeria could produce up to 4MMBOPD – 2 for export and 2 for internal consumption – to ease it’s current economic meltdown. Your report has opened my eyes. That the nation’s crude output has been on a downhill trajectory for four consecutive years, slipping to a dismal 1.186MMBOPD in 2022, is heart-wrenching. Neglect or abandonment of the critical gas development projects (CGDP) is another troubling revelation.
    Kyari’s competence and forthrightness in handling these vital assignments come into question, and don’t portend well for the next five years of his tenure. Yet, two other questions are pertinent: (1) Does Nigeria have full financial capacity to carry out these projects? (2) Could the absence of a functional Minister of Petroleum Resources be affecting decision-making? We’ve had three presidents since 1999 assume that critical office. It is one thing to delegate assignments, and quite another to be hands-on.
    Thank You!

  2. Aja Gana Ali says:

    Your criticism of Kyari’s preference for local industry oil companies for International Oil Companies (ioc), playing the nationalism card is misplaced. Bringing only one example of his preference of northern companies to those from the south shows mediocrity on your part.
    The gradual increase in accrued revenue from loss at 2019 to over 200billion naira 2020 and over 600 billion naira in 2021 highlighting operational and financial discipline has no place in your write-up.
    Accepting operational shortcomings of the company and exposing the level of oil theft and other criminalities and fearlessly pointing fingers at the culprits (security, high society, government officials, community leaders etc) without regards to threat to his life, which is unprecedented in the history of this vital industry is of no value to you.
    Posterity will judge accordingly those who are bent on bringing down patriots on flimsy and trivial issues for their twisted course.

    • Dr Kish U ONWUNALI says:

      The Editorial expository of the ongoing in the core upstream to Midstream/Downstream activities is applaudable.

      It X-rayed the strength and weaknesses of the key drivers at the top echelon of the NNPC and it’s focus. And sometime ago AOGR had advised that NNPC shouldn’t be seen as a local champion in terms of arm twisting other qualified Nigeria Upstream independents.

      This piece touched all round as regards Mallam Mele Kyari tenure as the axe man at NNPC and his reappointment. It is a balanced overview and a super constructive criticism to put the paths right.

      A point blank analysis of the period in discuss.

      #AOGR
      # Upstreamintelligenceupdate
      #Petmosnetworkafrica
      #HQNorth Abuja
      # GlobalstrategistPR

Leave a comment

Comment form

All fields marked (*) are required

© 2024 Festac News Press Ltd..