Changes in NNPC signal quick oil sector reforms

Appointed only last month, Ibe Kachikwu has made dramatic changes at the state oil company. The NNPC GMD said that he had started a three-pronged restructuring of the state-owned company that should lead to “a new NNPC” adding that this would entail the re-organisation of management personnel, a forensic audit of the firm’s accounts, and a review of its contracts with oil majors and other industry operators.

Kachikwu said the restructuring going on at the NNPC would be from “A to Z”, meaning from top to the bottom.

“It is an A to Z restructuring. I have done the first three layers, which had to do with the GEDs (Group Executive Directors) and Group General Managers. We are going to have a lot more now – the DGMs (Deputy General Managers) and GMs (General Managers) – as this would take us to the next layer, which is the lower layer.

“Over the next five-six months, you will begin (to) see emerging a new NNPC,” Kachikwu said.

More than 30 top management staff had been retired reducing the number from 122 to 83. As part of an overhaul of senior ranks intended to clean up the entity at the heart of the country’s economy, Kachikwu has tapped the private sector. He said his hiring strategy was intended to “refocus and sharpen” the company. He will also review all Production-Sharing Contracts (PSC) and Joint Venture Agreements (JV) as part of the extensive restructuring.

US endorses ongoing NNPC reforms

The United States Government has pledged its readiness to work with the new Management of the Nigerian National Petroleum Corporation, NNPC in achieving the Federal Government’s reform agenda in the oil and gas industry.

The US Ambassador to Nigeria, Ambassador James Entwistle said the United States is willing to provide all necessary support to the new NNPC Management to realize its set goals and objectives.

Entwistle noted that though the job of the GMD of NNPC is about the most challenging job in Nigeria, the US is convinced that Kachikwu has the skills, training and requisite experience to lead the oil and gas industry in Nigeria towards the path of growth and sustainable development.

NNPC to publish financial transactions

The new GMD has said that the corporation will publish periodically its financial transactions. The new development, according to Kachikwu, is aimed at ensuring transparency in the financial transactions of the corporation.

Stressing that transparency must be the new watchword of the corporation, Kachikwu who held a town hall meeting with employees of the NNPC, maintained that the corporation must be built on the foundation of accountability and transparency.

Crude oil swaps cancelled

The Nigerian National Petroleum Corporation (NNPC) confirmed the cancellation of the Offshore Processing Agreements (OPAs) between the corporation and other private firms including Duke Oil Company Inc., a subsidiary of NNPC. It also announced the cancellation of the contract for the delivery of crude oil to the Port Harcourt, Warri and Kaduna refineries awarded to Ocean Marine Tankers (OMT) Limited. NNPC explained in a statement signed by its spokesman Ohi Alegbe that the decision to cancel the crude delivery contract with Ocean Marine to the refineries was aimed at reducing cost and strengthening operational efficiency across the corporation’s value chain.

The state-run oil firm has also started the process of setting out new terms for the selection of new traders for the oil swap programme.

The criteria for the selection of new traders would require that they either own and operate refineries or have access to refining capacity while Nigerian companies would be required to show evidence of depots and retail services to make the shortlist. But the minimum capital base, he explained, has not been determined as NNPC was still working on the criteria that would ensure that “arm chair contractors” are eliminated.

Prunes crude oil lifters to 16

To instill transparency and probity in the award of the annual crude oil term contracts, NNPC mapped out measures to execute the 2015/2016 award of contracts to companies for the evacuation of Nigeria’s crude oil equity from the various crude and condensate production arrangements.

NNPC stated that as part of the measures to optimise the marketing of Nigeria’s crude oil and secure new market potential, the number of off-takers for the proposed 2015/2016 term contracts, which would emerge after a planned rigorous competitive bid has been pruned from 43 to 16.

The criteria for their selection would be stringent to ensure that “arm chair” companies which have short-changed the federal government in the past are not selected.

FRANK UZUEGBUNAM