Nigeria's new oil czar wants to open books
Openness will spur investment that has been throttled by uncertainty and opacity, the NNPC’s new chief says.
12 August 2019 | Economics
We are going to do everything possible to make that open … so that people can actually predict what we're going to do next. - Mele Kolo Kyari, MD: NNPC
The aim to ink a contract with the Dangote refinery, with a capacity of 650 000 barrels per day (bpd), is part of new managing director Mele Kolo Kyari's blueprint for transforming the Nigerian National Petroleum Corporation (NNPC) into a world-class state oil company.
The refinery, being built by billionaire Aliko Dangote, is set to be Africa's largest.
Kyari, who also intends to push for more transparency, said NNPC wants to be a "supplier of first resort" for the Dangote refinery.
"Ultimately, it will be a contract to supply crude," he said.
In his first interview with the international media since taking office last month, Kyari said he would publish the full list of those holding the nation's crude oil contracts and the firms who won deals to swap Nigeria's crude oil for products, along with audited accounts of NNPC's books.
He said the openness, and a plan to improve commercial terms for oil companies, would spur investment that has been throttled by uncertainty and opacity.
The contract lists have not been published for years, and NNPC has been dogged for decades by a reputation for corruption.
"We are going to do everything possible to make that open, the businesses open, so that people can actually predict what we're going to do next," Kyari said, adding that this would help to attract investment.
He said the contracts for swapping fuel would be published by the end of this week, though "clarifications" were needed before the crude oil contracts could be published. Industry sources told Reuters that those two-year contracts, awarded earlier this year, included close to 100 names.
NNPC is also pressing ahead with plans to revamp its own ailing refineries despite a nameplate capacity at Dangote refinery that is well above Nigeria's consumption.
"It's worth it," Kyari said of NNPC's refinery overhauls, adding that Nigeria could become a fuel supplier to the entire region. "Africa needs refining capacity," he said.
While he said they are considering both government and private funding, after the revamps, third parties would maintain and operate the state-owned refineries to ensure reliable production.
Italy's Maire Tecnimont is already working on the Port Harcourt plant, and Italian refiner ENI is an adviser. The refineries have processed oil only sporadically for years, leaving the nation to import virtually all its own fuel needs.
Kyari said that some ambitious proposals, including selling down government stakes in upstream oil and gas joint-venture agreements and changing the way it pays NNPC's portion of the bills owed under those deals, were on hold for now.
The government still intends to sell its stakes to less than 40%, Kyari said, but he noted that there was currently no framework in place for the sales.
NNPC is in talks with all operating partners to improve commercial terms, but he said the long-delayed legislation to overhaul the oil sector, known as the petroleum industries bill, needed to pass quickly to spur investment.
"There are investment decisions that cannot be made now because the investors are wary of the fiscal environment," he said.
The mammoth bill, covering everything from fiscal terms to Niger Delta community engagement, has been in the works for over a decade. But Kyari said the current government, with the legislature controlled by the party of president Muhammadu Buhari, could pass it.
"This time around, you have the best alignment," he said. "And I'm sure getting it passed will not be difficult." – Nampa/Reuters