To say that the Nigerian energy sector has seen significant progress since the implementation of the Petroleum Industry Act (PIA) in 2021 would be stating the obvious.
The signing of the Act in August 2021 by former President Muhammadu Buhari was a game changer for the Nigerian National Petroleum Company Limited (NNPCL) and the management team led by the Group Chief Executive Officer, Mallam Mele Kyari as it opened the door for more significant changes in the national oil giant.
It is noteworthy that Kyari had worked tirelessly to ensure the passage of the PIA, an initiative which is aimed at overhauling the country's energy laws and creating a deregulated environment, freeing the oil sector from government control and unbundling the oil company.
The passage of the PIA gave birth to a rejuvenated NNPCL in 2021, which empowered NNPCL to operate like every private company in Nigeria with exemption from the Fiscal Responsibility Act, Public Procurement Act and TSA in order to ensure there are no excuses for failure.
Following this milestone, Kyari, initiated new investment benchmarks to further rejuvenate the once ineffective company.
One of this success of some of these initiatives was seen last Thursday, when, in a major step towards boosting Nigeria's oil and gas production, the NNPC-TotalEnergies Joint Venture officially announced a $550m Final Investment Decision (FID) on the Ubeta Field Development Project.
This milestone is in line with President Bola Ahmed Tinubu's Presidential Executive Order on Oil and Gas Reforms aimed largely at improving the investment climate and positioning Nigeria as the preferred investment destination for the oil and gas sector in Africa.
The three Executive Orders, which became effective February 28, 2024, are the Oil and Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order, 2024; Presidential Directive on Local Content Compliance Requirements, 2024; and Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines, 2024.
Nigeria is endowed with large oil and gas resources and under Kyari's transformative leadership, the NNPCL had conceived the idea of monetising Nigeria's huge gas resources through various gas projects.
For a man who has transformed the NNPCL within the last four years despite the mounting opposition to some of his reforms initiatives, it is gratifying to know that the President believes in Kyari's capacity to implement energy policies that will enable the federal government to monetise all available oil and gas resources of today while paving the way for the total exploitation of new and cleaner energy sources of tomorrow.
Since the issuance of the Presidential Executive Orders, the NNPC Ltd. has redoubled its efforts to drive energy security by utilising Nigeria's abundant gas resources.
In demonstration of this initiative by the President, the NNPC-TotalEnergies Joint Venture officially announced a $550m Final Investment Decision (FID) on the Ubeta Field Development Project.
This investment by the NNPC and Total Energies under a JV arrangement is significant for Nigeria as the country seeks to unlock the huge potential of gas resources in its energy transition drive.
The Ubeta field was discovered in 1964 and it is North-West of Port Harcourt in the eastern part of the Niger Delta.
The investment will enable the field to produce about 350MMScf/day of gas and 10,000 BBLS/day of associated liquids.
It will be tapping into the vast gas reserves and contributing towards securing gas supply to the Nigeria Liquefied Natural Gas (NLNG).
The FID would not have been possible without the enabling fiscal environment provided by President Tinubu through the signing of the Executive Orders.
Kyari gave credence to this when he said at the well-attended signing ceremony that the continuous support of President Bola Tinubu's administration in facilitating a conducive operational environment as a major enabler in achieving this success.
"We appreciate Mr. President for supporting us with the appropriate fiscal environment. The Presidential Executive Order is instrumental to us getting to this significant milestone and we are now seeing the impact of the policy," Kyari added.
Under Kyari's leadership, the NNPC has invested heavily in domestic gas footprint expansion projects through the delivery of the trans-Nigerian gas pipeline projects which includes the Escravos project, the Lagos pipelines system, and the Ajaokuta-Kano Gas Pipelines.
As a national oil company, the NNPC is cooperating with its partners to solve the energy challenges facing the country.
The Ubeta field is the latest in a series of projects developed by TotalEnergies in Nigeria, most recently Ikike and Akpo West.
It is instructive to state that the FID on the gas project may not have been possible without the government's recent incentives for non-associated gas developments.
Ubeta fits perfectly with the NNPC Ltd's strategy of developing low-cost and low-emission projects, and will contribute to the Nigerian economy through higher NLNG exports.
Tinubu has significantly rekindled investor confidence in the oil and gas industry and this is responsible for the renewed hopes from Nigerians that more investments are on the way for the energy sector.
With Nigeria boasting substantial gas reserves exceeding 200 trillion cubic feet (Tcf) and a potential to reach 600 Tcf, it is pertinent Nigeria leverages the gas resource for sustainable development, energy security, and job creation.
Located in OML58, the Ubeta gas condensate field will be developed with a new 6-well cluster connected to the existing Obite facilities through an 11km buried pipeline.
Production start-up is expected in 2027, with a plateau of 300 million cubic feet per day (about 70,000barrels of oil equivalent per day including condensates). Gas from Ubeta will be supplied to NLNG, a liquefaction plant located in Bonny Island with an on-going capacity expansion from 22 to 30 Mtpa, in which NNPC Limited holds a 49 per cent interest.
Ubeta is a low-emission and low-cost development, leveraging on OML58 existing gas processing facilities. The carbon intensity of the project will be further reduced through a five MW solar plant currently under construction at the Obite site and the electrification of the drilling rig.
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As partners, TotalEnergies is working closely with NNPC Limited to enhance local content, with more than 90 per cent of manhours which will be worked locally.
The Ubeta FID justifies the effort invested by NNPC Limited, with unyielding executive support, into tackling the underlying reasons that have plagued the attractiveness of the Nigerian oil and gas industry to foreign investors in recent years.
The Ubeta project has a robust Nigerian Content plan and is poised to stimulate economic activities, create job opportunities, and create significant value for stakeholders.
The project will also enable capacity utilisation and substantial human capacity development (HCD), Research and Development as well as opportunities for banking, insurance, legal, and other services.
In addition to these, Nigerians have a lot to benefit as the project will give first consideration to in-country manufacturers that have valid Nigerian Content Equipment Certificate, regarding material procurement, while fabrication and construction are also to be significantly handled by well-established fabrication yards in the country.
With the massive investments being recorded in the oil and gas sector under the dynamic and focused leadership of Kyari, the NNPC Ltd is making significant progress in achieving its mandate which is to guarantee "energy for today, energy for tomorrow."
Onuba, a Chartered Accountant, wrote from Abuja.
