Forty Years on, Research and Development remain Elusive in NNPC

STRATEGY & OPERATIONS

Forty years on, H

research and development remain elusive in NNPC

By Uyojo Jeremiah

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uman Research and development is key to every industry, especially the oil and gas sector. A robust R & D strategy tells if a business will succeed or not. It helps to create a sustainable plan.

It also amongst other crucial roles provides a platform for creativity and innovation, particularly in the face of changing technologies and uncertainties.

innovations that favour green solutions rather than fossil fuels.

The Nigerian National Petroleum Corporation (NNPC) in 1977 established a R&D department to solve the operational and technical problems of the oil and gas industry through the application of the results of scientific research and the development of technology.

According to the corporation, the department, which boasts of highly The oil and gas industry is at crossroads. qualified personnel and experienced Attention is shifting from fossil fuels. Prices engineers, is ISO 9001:2000 certified with of commodities are on the brink daily. New upgrade to ISO 9001:2008 in progress. technologies are changing the business The department is reportedly in the environment. These issues therefore have process of obtaining certification for forced organisations, including National ISO 14000 Environment and ISO 17025 Oil Companies (NOCs), International Oil Laboratory accreditations. The basic Companies (IOCs) and entrepreneurs to mission for the unit was to engage in find new ways to do business to remain research, develop technology and provide relevant. These include cutting costs and services to oil & gas industries. For that developing strategies to focus on smart reason, the corporation reasoned that the Photo Credit: Guardian Nigeria

STRATEGY & OPERATIONS

section would be a worldclass petroleum research center driven by innovation and quality.

But over 40 years after, there are general criticisms questioning the impact of the department. The question most experts continued to ask are; Can Nigeria provide world class service for its oil and gas operations? Can it provide solutions to its technological problems? Can it undertake scientific developmental work in diverse areas of strategic importance to the technological development of the country?

Just recently, while the Ministry of Science and Technology hosted the 2018 Technology and Innovation Expo at the Eagles Square in Abuja, most participants, who saw the display of innovation by different companies were looking forward to something unique from the NNPC that was a major sponsor of the event but the agency exhibited nothing apart from talks and a beautiful stand.

However, one encouraging revelation at that event was that NNPC has brought down the cost of producing a barrel of crude oil to $20, targeting to produce the black gold at $15 per barrel.

Group Managing Director of the corporation Maikanti Baru, linked the feat to

the impact of science, technology and efficient work processes, saying the mileage would enable more revenue generation to government’s coffer.

Baru, who was represented by the Chief Operating Officer (COO), Gas and Power, Saidu Mohammed, said: “Today we have fully domesticated the engineering, procurement and construction aspect of the oil and gas industry and we are working handin-hand with the Nigerian Content Development and Monitoring Board (NCDMB) to get Nigerians who are willing to invest and innovative to propel

The oil and gas industry is at crossroads.

Attention is shifting from fossil fuels.

Prices of commodities are on the brink daily.

this country going forward, to go into the ventures of fabrication where we spend the big chunk of the money in the industry. In other words, we have gone far to domesticate procurement.”

But when one considers how countries like Saudi Arabia and Kuwait could pump a barrel of oil for less than $10, on average and Iran producing oil for about $10.70 per barrel, there won’t be a need to celebrate Nigeria for producing at double of those prices.

Though extant law that established the NCDMB look forward to developing necessary capacity that would enable locals dominate the sector, there are still much to do to boost capacity that will enable Nigerian entrepreneurs benefit adequately from the industry.

One area, where experts like the Managing Consultant, Degeconek Nigeria Limited, who is also the immediate past president of the Nigerian Association of Petroleum Explorationists (NAPE), Abiodun Adesanya, believe improved R & D could help Nigeria is in the area of exploration.

While Adesanya believes Nigeria needs to strongly explore hydrocarbon across the country, he stated that improved technology has helped other countries

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STRATEGY & OPERATIONS

Experts said technology play a key role in mitigating environmental challenges.

Indeed, while companies are reportedly cutting down on R & D budget, the development of new technologies that could replace fossil fuels may not be feasible.

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across the world to quickly discover oil.

The importance of utilizing sophisticated technologies to find and produce tomorrow’s hydrocarbons is becoming increasingly imperative. Nigeria has spent billions of dollars searching for oil across the country, especially in the Northern region. The search, which has been ongoing for decades, remain a mirage without any significant discovery.

The Society of Petroleum Engineer said E&P industry is currently facing numerous challenges. The association calls for more research and development into higher

Most experts insisted that investing in R&D to create new and improved technologies is vital in enabling the industry to meet global energy demand.

While the country is looking to opening up the sector through the Petroleum Industry Bill, the need for NNPC to lead investors into investing into research and development can not be overstressed.

Similarly, as exploration is key to boost the country’s reserves and earnings, the need to refine crude oil locally also buttress the need to boost research and development across the sector’s value chain.

resolution subsurface imaging, reusing produced water, in-situ molecular manipulation, increasing hydrocarbon recovery factors and carbon capture and sequestration.

Environmental impact is on the rise and Nigeria’s Niger Delta region is on the spotlight as one of the worst polluted areas in the world. Experts said technology plays a key role in mitigating environmental challenges. Indeed, while companies are reportedly cutting down on R & D budget, the development of new technologies that could replace fossil fuels may not be feasible.

Uyojo Jeremiah is a business journalist. He writes from the Federal Capital Territory, Abuja.

He can be reached on kingpsalmist@gmail.com or on Twitter @kingpsalmist

STRATEGY & OPERATIONS

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Photo Credit: Premium Times

STRATEGY & OPERATIONS

NNPC Signs off $3.8Billion on Four Deals To Produce 200,000BOPD 16

production from about six Oil Mining Leases. (61,200 BOPD, 215 MMscf/d anticipated, at peak)

N

•

The transactions include:

The corporation is excited by these transactions. “For the IOCs partners”, says NNPC Group Managing Director Maikanti Baru, “we would continue to leverage the strong credit rating of these partners, identifying key quickening projects that are easy to mature with strong cash flow projections and attracts necessary funding to the debt market.”

igerian National Petroleum Corporation, the state hydrocarbon firm, has signed third party financing deals for three projects operated by its JV partners with international banks to the tune of $3.1Billion in the last two years.

A fourth project will benefit from contractor services in lieu of finance. The projects are to deliver 191,200BOPD in incremental production.

•

$1.2 Billion facility for Chevron operated Project Cheetah, which is to ramp up production in the NNPC/CNL JV’s Western swamp and shallow water assets (41,000 BOPD expected);

•

$780 Million loan for Chevron operated Falcon project, to develop gas and condensates in the Sonam field (39,000 BOPD, 283 MMscf/d at optimum)

•

$1 Billion for the Shell operated Santolina, which is about incremental

$700 Million Anyala/Madu field development project, operated by First E&P, in which Schlumberger will deliver oilfield services in return for crude (50,000 BOPD, 120 MMSCF/d).

He argues that “these attractive financing approaches to fund NNPC JVs obligation have helped to renew investor’s confidence and cement further foreign direct investment.

In particular, this has opened local banks participation in the financing of the upstream as the financing are syndicated from local banks and international lenders.”

STRATEGY & OPERATIONS

Adopted Strategy for Self-Funding Alternative

Projects

Amount of Funds Raised (US$M)

Incremental 2P Reserves to be Developed

Incremental Production

Oil (MBBls)

Gas (Bscf)

Oil (KBopd)

Gas (mmscfd)

NNPC/CNL JV Project Cheetah

1,200

112

672.8

41

127

NNPC/CNL JV Project Falcon

780

211

1900

39

283

NNPC/SPDC Project Santolina

1,000

266.2

403.8

61.2

215

NNPC/ 1st E&P JV Schlumberger (Development of OML 83 & OML 85)

700

193

800

50

120

Total

3,680

782.20

3,776.6

191.2

745

Discussions ongoing across the different JVs to mature new projects and work out most sustainable funding solution Source: Africa Oil+Gas Report, August –September 2018

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