Turbulent Year: NNPCL Triumphs With N3tn Profit, Refinery Revival

With a volatile global oil market in 2024 tied to geopolitical tensions and other local challenges such as oil theft and pipeline vandalism amid the pressure to up oil production levels, the NNPC Ltd. under the leadership of Mallam Mele Kyari has effectively navigated the challenges with many milestone achievements to show.

The state-owned oil firm revitalised 60,000-barrel-per-day, Port Harcourt Refinery, which had been moribund for over 30 years and through stringent financial management strategies, declared N3.297 trillion profit for the 2023 financial year, the highest in its 46-year history.

While the challenges remain enormous, the NNPC Ltd. indeed deserves accolades for the grounds covered so far. Our correspondent reports 

In a year marked by economic challenges and global uncertainties, Nigerian National Petroleum Company Limited, under the visionary leadership of its Group Chief Executive Officer, Mele Kyari, has emerged as a beacon of hope and resilience for Nigeria.

Through groundbreaking initiatives and innovative solutions, Kyari has redefined Nigeria’s oil and gas sector trajectory, succeeding in positioning NNPC Limited as a shining light among Government institutions.

Like a master mariner, Kyari steered the national oil company through troubled waters, navigating against the tide without succumbing to the storm.

Of course, the revival of the old Port Harcourt Refinery, after over three decades of dormancy, is a perfect example of the can-do spirit of the NNPCL under Kyari.

Revitalising Port Harcourt Refining Company (PHRC)

For decades, efforts to revive the Port Harcourt Refining Company (PHRC) seemed unattainable, but under Kyari’s leadership, this long-elusive goal has been realised.

The reopening of the 60,000-barrel-per-day-old refinery marks a pivotal moment in Nigeria’s journey toward energy self-sufficiency and showcases Kyari’s determination to reshape the country’s energy landscape.

Dormant for over 30 years, the old Port Harcourt refinery, built in 1965, is now back in operation, producing 1.4 million liters of PMS, 900,000 liters of kerosene, 1.5 million liters of diesel, and other critical products daily.

This revival follows the Federal Government’s $1.5 billion investment in 2021, which NNPCL effectively managed to deliver the long-overdue turnaround.

Skepticism surrounding this achievement has been silenced by testimonies from labour unions, refinery workers, and industry experts, all lauding the refinery’s smooth operations.

Meanwhile, the repair of the new 150,000-barrel-per-day refinery is over 90 percent complete, promising a combined refining capacity of 210,000 barrels per day upon completion.

NNPCL’s Group Executive Vice President, Downstream, Isiyaku Abdullahi, highlighted the facility’s state-of-the-art upgrades, ensuring the rehabilitation aligned with global standards.

This milestone sets the stage for not only domestic self-sufficiency but also the export of refined petroleum products, boosting Nigeria’s economy and energy sector.

Championing Alternative Energy Sources

Kyari’s foresight in promoting Compressed Natural Gas (CNG) as an alternative energy source has provided Nigerians with a cleaner, more cost-effective option amid soaring global energy prices.

This initiative aligns with global energy transition trends while addressing local energy demands, offering immediate relief to citizens and businesses alike.

The NNPC under Kyari has perfected plans to deliver 12 CNG Mother Stations and Mini LNG Plants as part of efforts to boost the existing 1.6bscf of gas supply for the domestic market.

NNPCL’s Chief Corporate Communications Officer, Olufemi Soneye, had on July 4, 2024, quoted Kyari as declaring that the drive to bring CNG closer to Nigerians had since commenced and was irreversible.

Speaking during the simultaneous commissioning of 12 CNG stations in Abuja and Lagos, Kyari promised massive deployment of CNG stations nationwide.

“There is simply no way to turn back on delivering CNG for all Nigerians. It is the right thing to do. Is it late? Yes, but we will make progress, we will cover the gap to ensure that the volatility we see with Premium Motor Spirit (petrol) does not apply to gas,” Kyari stated.

President Bola Tinubu had mandated that one million CNG vehicles should hit Nigerian roads by 2027 and in furtherance to that, the Federal Government, through the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), recently announced plans to convert 100,000 vehicles to CNG within the next 18 months.

SMEDAN said the initiative, which is in collaboration with the Presidential Committee on the Compressed Natural Gas Initiative and Rolling Energy, was focused on reducing costs for small and medium enterprises while supporting Nigeria’s transition to cleaner energy.

The NNPCL boss commended President Tinubu for providing the needed support to drive domestic gas utilisation aimed at delivering cleaner and cheaper sources of energy to Nigerians.

While assuring that the NNPC Ltd. would continue to deliver more strategic gas projects for the benefit of Nigerians, Kyari reaffirmed the determination of the government-owned company to guarantee the nation’s energy security.

The Managing Director, NNPC Retail Limited, Mr Huub Stokman,  revealed that in the next one year, NNPC Retail would have launched over 100 CNG sites, including 16 NNPC Gas Marketing and NIPCO Gas JV sites.

“CNG provides Nigeria with affordable alternatives to existing available fuel products. It will be about 40% cheaper than petrol in Nigeria and with continued investments, it will become a significant part of our energy mix,” Stokman added.

Already, NNPC Gas Marketing Limited, a subsidiary of NNPC Limited, in partnership with NIPCO Gas Limited has developed an Auto-CNG rollout plan for the construction of 35 CNG stations across the various geographical zones of Nigeria.

The Chairman of the NNPC Board of Directors, Chief Pius Akinyelure and the Minister of State for Petroleum Resources (Gas), Rt. Hon. Ekperikpe Ekpo, backed Kyari’s CNG investments, expressing optimism that CNG adoption would foster economic benefits, create jobs, stimulate local economies, help reduce emissions, and combat climate change.

Also, as part of its efforts to accelerate CNG adoption, NNPC Retail Limited (NRL), a subsidiary of NNPC Ltd, recently sensitised over 1,000 auto mechanics through a comprehensive awareness initiative.

The sensitisation exercise demystified the process of converting gasoline-powered vehicles to CNG and encouraged the adoption of sustainable energy solutions.

“We believe that sensitising mechanics on the importance of CNG adoption is critical to achieving Nigeria’s long-term energy goals. While this engagement focused on raising awareness, we urge artisans to actively pursue the skills required to contribute to this transformative shift toward cleaner and more affordable fuel options.

This initiative represents a crucial step in advancing the nation’s transition to a cleaner, more sustainable energy future,” Baba Shettima Kukawa, Executive Director of Retail Operations & Mobility at NRL, said.

Supporting private sector growth

Kyari also played a pivotal role in supporting the Dangote Refinery, Africa’s largest single-train refinery, by securing a $1 billion loan backed by NNPC’s crude reserves.

This strategic move not only addressed liquidity challenges but also ensured the successful completion of Nigeria’s first private refinery. It underscores Kyari’s commitment to fostering public-private partnerships that deliver long-term value to the nation.

The NNPCL boss considers the investment in the Dangote Refinery as a strategic move aimed at strengthening domestic fuel supply.

“A strategic decision to secure a $1 billion loan backed by NNPC’s crude was instrumental in supporting the 650,000-barrel-per-day Dangote Refinery during liquidity challenges, paving the way for the establishment of Nigeria’s first private refinery. This initiative underscores NNPC’s dedication to fostering public-private partnerships that drive national development,” Soneye, the NNPC spokesman, said at an Energy Relations Stakeholders Engagement in Abuja.

Recall that in September 2021, the NNPCL proposed to acquire a 20 percent stake in the Dangote Refinery for $2.76 billion, with an initial payment of $1 billion made to the Dangote Petroleum Refinery and Petrochemicals Free Zone Enterprise (DPRP FZE).

However, due to restructuring and financial challenges, NNPCL’s stake was later reduced to 7.25 percent as of December 2023.

Defending the decision to cap the Dangote Refinery investment to 7.2 percent, the NNPC spokesperson who featured on Berekete Family Radio, said the state-owned energy firm reduced its stake in Dangote Refinery to invest in CNG.

“The reason for reducing our stake in Dangote Refinery is because we wanted to invest in CNG. We observed that CNG is very cheap and all over the world, people are investing in clean and cheaper alternative energy, ” he explained.

“That is why the NNPC is building different CNG stations everywhere. We understand that with N10,000, Nigerians can fill their cars and use it for two weeks. We realised that gas is cheaper in Nigeria, why don’t we invest in it?”

To further ensure the operational success of the Dangote Refinery while enhancing the nation’s domestic gas utilisation, the NNPC Gas Marketing Limited (NGML), a subsidiary of the Nigerian National Petroleum Company (NNPC) Limited, has recently inked a Gas Sale and Purchase Agreement (GSPA) with Dangote Petroleum Refinery and Petrochemicals FZE.

Under the terms of the agreement, signed by the Managing Director, NGML, Barr. Justin Ezeala and the President/CEO of the Dangote Group, Aliko Dangote, NGML will supply 100 million standard cubic feet per day (MMSCF/D), 50MMSCF/D being firm supply and the rest 50MMSCF/D interruptible natural gas supply to the refinery for an initial period of 10 years, with options for renewal and growth.

This, among other instances, cemented NNPCL’s position as a strong pillar of support for its private sector partners.

Achieving historic profitability

For the first time in decades, NNPC declared a profit under Kyari’s stewardship—a groundbreaking achievement in the company’s history.

Furthermore, NNPC has already surpassed its profit projections for 2024, reflecting the impact of robust financial and operational reforms spearheaded by Kyari.

In 2021, NNPC declared profit in its operations for the first time.  From a loss position of N803 billion in 2018, it reduced the loss further down to N1.7 billion in 2019.

However, in 2020, it posted its ‘first-ever’ profit of N287 billion, then in 2021, it recorded an N674.1 billion profit and in 2022, the profit grew to N2.548, an unprecedented achievement in its financial performance.

In a company where profitability was like an anathema, Kyari has bucked the trend and changed the narrative by posting profit year-on-year.

In August 2024 when the NNPCL released its 2023 Audited Financial Statement, it declared a net profit of N3.297 trillion at the close of the financial year which ended in December 2023, an increase of over N700 billion (28%) when compared to the 2022 profit of N2.548 trillion.

The N3.297 trillion profit declared for 2023 is the highest since the company’s inception, 46 years ago. This, according to experts, is a huge testament to Kyari’s purposeful leadership and sound management capacity.

The Chief Financial Officer of the Company, Mr. Umar Ajiya, remarked that posting such impressive returns demonstrated NNPC Ltd’s commitment to sustaining profitability and supporting the attainment of national energy security as stipulated by the Petroleum Industry Act (PIA) 2021, and by extension, as expected by the company’s shareholders.

“Our fiscal performance reflects both strategic foresight and operational resilience. Despite inherent challenges of our operational and economic environment, we have improved the productivity and the financial performance of this great company,” Ajiya stated.

Stabilising economy amid crises

Amid a critical foreign exchange crisis, Kyari secured a $3 billion Gazelle loan to stabilise the nation’s finances and bolster the energy sector, aiding efforts to navigate complex economic challenges.

In December 2023, the NNPC secured a $3bn forward sale agreement, pledging 90,000bpd from Production Sharing Contract assets to cover future tax and royalty obligations.

The $3 billion crude oil repayment loan from AFREXIMBank is to help the Federal Government attend to some of its dollar obligations, assist the Central Bank of Nigeria in stabilising the foreign exchange market, and provide funding for NNPC.

As of the end of 2023, $2.25 billion had been drawn from this facility, with repayments scheduled to begin by mid-2024.

This intervention highlights NNPC’s strategic importance as a stabilising force in Nigeria’s economy.

Providing details about the deal in the document titled, “Everything you need to know about the NNPC Limited’s $3.3bn loan, also known as Project Gazelle,” NNPC said, “This is a financing agreement secured by NNPC Limited to prepay future royalties and taxes to the Federal Government.”

The company also stated that it adopted a lower price benchmark for the $3.3bn crude-for-cash loan to reduce the risk of default and ensure financial stability.

Giving details on the benchmark oil price, the company said the facility used a conservative crude price of $65/barrel to calculate the allocated crude to be produced and sold.

NNPC also said repayments were strategically planned and tied to future oil sales, with conservative pricing in oil sales contracts mitigating the risks associated with oil price volatility.

Accelerating gas pipeline projects to power Nigeria’s energy future

The NNPCL has also made significant strides in consolidated efforts aimed at delivering critical gas pipeline infrastructure across the country to enhance gas supply and drive economic growth.

At the forefront is the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline Project, a 614-kilometer pipeline capable of transporting 2.2 billion cubic feet of gas daily.

As of December 2024, the project is reported to be approximately 80 percent completed, with significant sections already laid and connected, promising to link southern gas reserves to the industrial hubs of northern Nigeria.

However, the NNPCL is now projecting that the project will be finalised by the first quarter of 2025.

At completion, this project is expected to support the establishment of three new gas-fired power plants in Abuja, Kaduna, and Kano, which are expected to generate a total of 3,600 megawatts (MW) of electricity.

It is expected to provide a reliable source of natural gas, facilitating industrialisation in central and northern Nigeria.

Another milestone is the near completion of the Obiafu-Obrikom-Oben (OB3) pipeline, a key component of Nigeria’s gas network.

The OB3 pipeline will play a vital role in improving gas supply to power plants and industries, addressing long-standing challenges in Nigeria’s energy sector. NNPCL’s progress on this project underscores its commitment to closing infrastructure gaps and ensuring a seamless flow of natural gas to critical areas of need.

On the international front, NNPCL has also ramped up collaboration on the Trans-Saharan Gas Pipeline (TSGP), a transnational project designed to export Nigerian gas to Europe via Niger and Algeria.

With feasibility studies concluded and bilateral agreements advanced, the project is closer than ever to becoming a reality. This initiative not only aims to diversify Nigeria’s gas export markets but also positions the country as a key player in addressing Europe’s energy needs.

Domestically, NNPCL has championed the expansion of gas infrastructure to support power generation, industrialisation, and clean energy adoption.

Through its “Decade of Gas” agenda, the company has invested heavily in developing local markets and enabling industries to leverage natural gas. These efforts have bolstered Nigeria’s energy security and laid the foundation for economic resilience, cementing NNPCL’s role as a transformative force in the nation’s energy sector.

Beyond Oil: NNPCL’s groundbreaking electricity projects 

Apart from its efforts within the oil and gas space, NNPCL is also extending efforts to deliver on complex power initiatives.

With significant progress in both the GIPP and MEPP, NNPCL is not only bridging energy gaps. With a $1 billion equity contribution to the GIPP project, NNPCL is demonstrating its commitment to enhancing the nation’s energy capacity.

Developed in partnership with China Engineering & Machinery Corporation (CMEC), the 1,350 MW GIPP consists of three power train blocks of 450 MW each.

The project’s groundbreaking ceremony in August 2023 marked the start of a transformative endeavour, with the first phase nearing completion by December 2024.

The GIPP is a centrepiece of NNPCL’s broader strategy to boost power generation and reduce Nigeria’s reliance on erratic electricity supply.

The project highlights a synergistic partnership between NNPCL and global energy leaders, with CMEC handling Engineering, Procurement, and Construction (EPC).

Once fully operational, the plant will provide a sustainable solution to Nigeria’s energy demands, supporting industries and households alike while catalysing economic growth.

Complementing the GIPP, NNPCL has also delivered the 50 MW Maiduguri Emergency Power Project (MEPP), a vital lifeline for the conflict-affected region. Commissioned on March 2, 2023, the project’s 32 MW Simple Cycle phase is already operational, restoring electricity to thousands of residents and businesses.

The remaining 18 MW Combined Cycle phase is on track for completion in 2025, further enhancing the project’s efficiency and capacity. The Honourable Minister of State for Petroleum Resources (Gas), Rt. Hon. Ekperikpe Ekpo, commended NNPCL’s efforts during a recent inspection, lauding the organisation’s swift execution of President Tinubu’s vision for energy security.

A Legacy of Transformation

Mele Kyari’s tenure as Group CEO of NNPC Limited has been marked by transformative achievements that extend beyond the oil and gas sector.

His leadership has fortified NNPC’s role as a cornerstone of Nigeria’s economic and energy stability while setting the company on a trajectory of sustainable growth.

As Nigeria navigates a turbulent year, the achievements of NNPC Limited under Mele Kyari stand as a testament to the power of visionary leadership and the potential for positive change.

Indeed, NNPC Limited is a gift to Nigeria—one that continues to deliver value, stability, and hope for a brighter future.