NNPC eyes fuel export hub with Dangote partnership

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Energy

Thursday, August 8,2019

State-run oil firm, the Nigerian National Petroleum Corporation (NNPC), on Wednesday said it plans to partner with the  650,000 barrels per day (bpd) Dangote Refinery to turn the country into a fuel supplier hub for the sub-region.

It also said the Nigeria-Morocco Gas Pipeline (NMGP) Project will open new windows of opportunities for the gas aspirations of Nigeria.

Its Group Managing Director, Mallam Mele Kyari, who 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 told Reuters in an interview yesterday. He plans to make public list of firms holding the nation’s crude oil contracts and those that won deals to swap 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 next 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.

After the revamps, he said third parties would maintain and operate the state-owned refineries to ensure reliable production.

Kyari said some ambitious proposals, including selling down government stakes in joint-venture agreements 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 per cent, 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. And I’m sure getting it passed will not be difficult,”he said.

Speaking during a stakeholders’ engagement between the Corporation, its Moroccan partner, the Morocco National Office for Hydrocarbons & Mines (ONHYM), and the executives of international oil companies (IOCs) operating in the country, at the NNPC Towers, Abuja,  Kyari assured that the gas sector will be transformed.

The meeting was sequel to high-level discussions on the Pipeline Cooperation Agreement (PCA) for the NMGP project signed between both countries during separate visits by their leaders–President Muhammadu Buhari and King Hassan VI, respectively.

The PCA will particularly facilitate the establishment of a gas pipeline to supply the product from Nigeria to Morocco, the West African sub-region and further into European markets.

At the moment, both countries are planning to extend the pipeline that has been pumping gas from Nigeria to Benin, Togo and Ghana since 2010 to Morocco.

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