BY CLARA NWACHUKWU

One of the objectives of the ongoing reforms at the Nigerian National Petroleum Corporation, NNPC, is to transform into a truly profitable entity, comparable to the Aramco of Saudi Arabia, or PetroBraz of Brazil, or even Angola’s Sonangol and a host of other such national oil companies.

Ahead of the signing of the Petroleum Industry Bill, PIB, a law expected to unbundle the NNPC becomes effective, the Corporation through its exploration and production arm, Nigerian Petroleum Development Company, NPDC, is demonstrating its capability and ability to compete effectively with its peers by turning the fortunes of the company around.

Established in 1988, to enable the NNPC meet its objective of being a major player in the upstream sector of the oil and gas industry, the company could not fully realise the set objective mainly due to lack of cooperation from past administrations, some of which actually stripped the company of some of its very prolific acreages.

JOA clause
As NPDC struggled with these issues, growth was stunted until the Minister of Petroleum, Mrs. Diezani Alison-Madueke, decided to take advantage of an existing clause in the joint venture, JV operations to prove that the E & P Company can be profitable with the right management and support.

With this support, the Company emerged operator in line with the NNPC/Shell/Elf/Agip Joint Operating Agreement, JOA, which binds parties in the Shell JV.

The NNPC explained that “The JOA amongst other issues deals with cessation of operatorship, and under what grounds an operator can be removed. It also deals with the appointment of a successor operator. The document explicitly states that in the event an operator is removed, one of the non-operators will become the successor operator.

“In the case of the Shell JV, three out of the four parties to the JOA divested their equity thereby leaving NNPC as the only surviving party. The article further stipulates that in the event that one of the Non-operators becomes the successor Operator, it shall be entitled to appoint an affiliate as operator in lieu of itself.”

Accordingly, with the support of the President Goodluck Jonathan’s administration and encouragement from the minister, NPDC began to find its feet as an independent producer. With this development, the trend of asset stripping that was the norm under previous administrations was halted and assets were rather handed over to it.

New targets
It was not just about handing down assets, but in 2010, the Minister of Petroleum Resources gave the NPDC with production of about 65,000 barrels per day, bpd, a target output of 250,000 bpd, by 2015 to justify the support given to it.

Thereafter, the Company went to work and has since recorded some significant milestones by upping output to current 130,000bpd representing a 100% growth in production.

Speaking about the achievement recently, Alison-Madueke gave the assurance that under her watch, the 250,000bpd production target by 2015 would be realised.

Avenues for growth
A bulk of that growth was achieved from the Oil Mining Leases, OMLs handed over to the NPDC upon the divestment of some of the Joint Venture partners of its parent company, NNPC. These include OMLs 26, 30, 34 and 42.

Alison-Madueke noted that efforts to replicate the feat of doubling the company’s production over the next few years to meet the target is on course, stressing that to sustain that tempo of production growth the company commenced an aggressive drilling programme.

For instance, it has successfully drilled two new wells in its OML 119. The wells, Okono 6 and 7, are currently producing 12,000 bpd. This is by no means a mean feat especially considering the fact that these wells were producing an average of 6,000bpd in an area where most of the surrounding wells produce an average of between 2,000 and 3,000 bpd.

Speaking on the milestone recorded so far, the Minister said the company planned to drill more wells this year, and would deploy two more rigs in addition to the two currently on site. She added that as part of its growth projection, the target is to drill 40 wells over the next five years.

Currently plans are underway to meet and possibly exceed the 250,000bpd targeted by 2015, not just by drilling more wells, but also engage in well repairs and maintenance activities aimed at boosting reserves to ensure sustainability.

For instance, the company carried out repairs on some of its wells in OML 26 in June last year. This helped to double production from those wells, which added up to the company’s current 130.000 daily production.

The company has also completed detailed study that will enable it sustain a development drilling campaign commencing from this year end. This will lead to a further doubling of production again in the next 18 to 24 months.

Boosting gas output
Alison-Madueke expatiating on the milestones noted that NPDC is also breaking new grounds in gas production, in keeping with its mandate to meet the Federal Government’s aspiration to provide adequate gas for domestic use, especially in power generation.