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National oil company, the Nigerian National Petroleum Corporation (NNPC) says it was focusing on third party financing of oil and gas development projects in the country, as the issue of financing poses a tough knot in the nation’s oil & gas industry.
According to Mele Kyari, NNPC’s group managing director, there is a strong view to derive maximum benefit for the country’s over 200 million citizens through oil and gas. He was speaking during a visit he made to the Revenue Mobilization, Allocation and Fiscal Commission (RMAFC) chairman in Abuja.
He said there was need for the national oil company and the RMAFC, with other relevant government institutions, to work together to tackle challenges facing the nation’s oil and gas industry, with a view to boosting revenues from the sector.
Kyari said the recent successes recorded by the NNPC were as a result of the trust and confidence reposed on the corporation’s current management by the federal government, stressing that the corporation hit 2.49 million barrels of crude oil per day production level in April this year, a feat which has not been achieved in the last 10 years.
But the current global reality of energy transition, which posits that gas resources are a more viable revenue earner than crude oil, poses a great challenge for the NNPC, a national oil company still wearily lagging behind its peer NOCs like Saudi Aramco, Angola Sonangol, Costa Rica, Scotland, Morocco, among others, that are already betting on green and renewable energy, with concerns by climate change proponents steering the world away from fossil fuels.
The country also faces a tough task to drive its gas industry infrastructure development to a reasonable height, where it becomes profitable for private sector participation. Currently, the nation’s gas is bogged by uncertain fiscal, commercial frameworks along the value-chain.
The Africa Oil Week (AOW) in its October report advised Nigeria to tailor its gas reforms to drive economic growth, rather than just to boost revenue stream. AOW further warned that the on-going energy transition could hit the NNPC negatively.
Kyari, however, says NNPC was beginning to focus more on gas development to boost the nation’s economy and offer maximum value to Nigerians.
“As we intensify efforts towards exploitation of oil, gas has become very prominent in transactions. Throughout the Covid-19 situation, the only stream of revenue that was not impacted negatively was the gas stream and that is why we have shifted our focus to gas both in the domestic market and for export,” he said.
He stressed that there was need for regular high-level interaction between the corporation and the RMAFC on financing the nation’s oil & gas industry for profit.
Elias Mbam, the RMAFC chairman commended the Mele Kyari-led NNPC for its openness and sustained progress towards accountability and meeting its obligations to the federation, in spite of the challenges posed by the Covid-19 pandemic.
He said, both organisations need to share information, look at challenges and provide solutions that would enable the oil and gas sector to yield more revenue to the federation account.