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NNPC undermined: 5 GMDs in 3 years

THE Nigerian National Petroleum Corporation (NNPC) has witnessed the appointment and replacement of 5 Group Managing Directors (GMDs) to superintend its affairs in less than 3 years, undermining the corporation’s policy focus and direction and by extension that of the country’s oil and gas industry.

Sweet crude gathered that the latest change at the NNPC which saw the replacement of Mallam Shehu Ladan as GMD barely one month after his appointment with Mr. Austen Oniwon may have sealed any hope of commitment to spending on the part of the international oil companies.

In the last three years industry projects have been perpetually delayed, sidelined or described as uneconomic leaving the recently enacted Nigerian Content Development Act in jeopardy.

The late President Umaru Musa Yar’Adua inherited Mr. Funsho Kupolokun from the Chief Olusegun Obasanjo administration and after a keeping him for about four more months, he was replaced with Alhaji Abubakar Lawal Yar’Adua.

Alhaji Abubakar Yar’Adua (no relation of the late president) then took the corporation through 16 grinding months noted for a lack of clear cut policy direction and rudderless leadership and was replaced in January 2009 with Dr. Mohammed Sanusi Barkindo.

Sweet crude gathered that although Dr. Barkindo’s background, cerebral disposition and international background inspired hope and confidence in industry watchers, his 15 months spell at the helm of the corporation’s affairs was marked by constant face-off with the national assembly committees on petroleum and seeming state of perpetual disagreement with the IOCs over review of the Petroleum Industry Bill.

However, his leadership provided a concise programme regarding the transformation of the corporation from a stereotype national oil company to an international national oil company.

In April, 2010 the presidency announced his replacement with Mallam Shehu Ladan who had been retired in April, 2009 and no reason was advanced for Barkindo’s replacement.

By May, 2010 a little over one month after Mallam Shehu was appointed and the oil and gas industry operators were still trying to find a rhythm, the presidency announced his replacement with Mr. Austen Oniwon who until his appointment was the Group Executive Director in charge of Refining and Petrochemicals.

Although the presidency also served notice that government it is set to probe the accounts of the corporation and will engage the services of an astute firm for this purpose, it stopped short of admitting some measure of financial malfeasance may have been uncovered.

“Even if they have uncovered fraud, the government of President Jonathan cannot extricate itself from culpability here because it is an extension of the Yar’Adua administration.

You must also realise that the seeming poor policy supervision and implementation is tied to the government’s inability to guarantee security of tenure for the office of the group managing director,” a director with one of the IOCs volunteered on the basis of anonymity.

“We have chased everybody away with our shoddy way of doing business. When Rilwanu Lukman and Mohammed Barkindo were removed as minister and GMD respectively, the industry got excited because their lack of ability to carry the IOCs along had badly affected investments. Stakeholders felt President Jonathan knew what the industry wanted. He created a panel to review the PIB and this inspired confidence,” another oil industry operator volunteered.

Sweet crude gathered that the panel has since met with the OPTS (organised petroleum trade section) which includes all the IOCs and other Nigerian oil and gas companies.

It was gathered that the preliminary report of the panel to President Jonathan served notice that foreign investors have been chased away, Nigeria rendered less attractive as an investment destination, ongoing projects had ceased in the upstream and those who hitherto superintended policy formulation and implementation failed to position Nigeria to take advantage of the global economic downturn.

Another industry operator who did not want his name in print disclosed that ‘the fear now is that as usual, all group executive directors could be sacked and with the spectre of as probe of the corporation’s accounts, I hope we would not awake one morning to hear that fire has gutted the NNPC headquarters’?

Projects perpetually delayed

In the last three years decisions on major projects have been put off for one reason or the other and some of these projects include chevron’s Nsiko, Shell’s Bonga SW/NW,

Aparo, Olokola LNG, Brass LNG, NLNG trains 7 & 8, among others.

Last year, Shell served notice that the Forcados Yokri and Bonga North West projects in Nigeria which were due to come onstream in 2010 or 2011 will now come onstream in 2012 or later while Bonga North West is being re-tendered.

Although invitation to tender (ITT) on Total’s Egina was scheduled for 2010, nothing seems to be happening in this regard and chances are that in the face of the constant changes at the NNPC this may be rescheduled.

Sweet crude checks revealed that there is no information on Chevron’s Nsiko, while available information indicates that ITT on Mobil’s Bosi scheduled for this year may not happen after all.

To further underscore the impact of the constant changes at the NNPC, Mallam Shehu Ladan was removed while attending a board meeting of the Brass LNG in London and even though the board and management of Brass LNG have seized the initiative to drive development of the project, it is obvious that not much can possibly be achieved with such government interference.

Meanwhile, checks revealed that decision on how and when to proceed with the Olokola LNG project may have also been put off indefinitely.

Collectively, these projects have capacity to ramp up Nigeria’s crude oil output capacity to over 4 million barrels per day and liquefied natural gas production to about 70 million metric standard cubic feet per annum, whenever they come on stream.

It was gathered that under Alhaji Abubakar Yar’Adua the corporation’s Group Executive Council (GEC) decided to put off decision on some of these projects till year 2014 and dismissing some others as uneconomic.

However, further checks revealed that the security situation in the Niger Delta and ongoing discussions around the fiscal terms contained in the Petroleum Industry Bill did not inspire confidence in the IOCs going forward.

NCD Act in jeopardy:

“Without enough significant projects of critical mass to ignite implementation of the Nigerian Content Act, the law is not worth more than the paper and ink with which it was printed,” a Nigerian oil and gas industry service provider enthused in far away Houston, Texas on the sidelines of the 2010 Offshore Technology Conference (OTC).

The service provider who did not want his name in print noted that the NCD Act can only be implemented if there are enough significant projects ongoing and urged government to come alive to its responsibility by offering the IOCs the right incentive to invest.

He noted that even though the NCD Act may be deemed the best thing that has probably happened in the Nigerian oil and gas industry in the last three years, government must take the next logical steps to make the Act work.

Checks revealed that the engineering and fabrication yards spread across Lagos, Port Harcourt and Warri are either shut down having laid-off staff owing to lack of projects or partially shut and providing skeletal services.

Indeed some others engineering and fabrication yards have gone bankrupt and are in receivership owing to their inability to repay facilities they obtained for expansion in anticipation of the jobs they had been informed were on the schedule.


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