Nigerian National Oil Company [NNPC] announced in October last year that the much-anticipated natural gas power generation project in the African continent - the Okpai power plant in Delta will be put into operation. According to the Clean Development Mechanism Protocol of the United Nations Framework Convention on Climate Change, the two phases of the project will generate 1,000 megawatts of electricity together upon completion. This rare achievement marks an important milestone in the country's infrastructure development, reaffirming NNPC's position as the main driving force behind the Nigerian economy.
The state-owned NNPC fuels industrial facilities, commercial enterprises and individuals, and its business covers a wide range of Nigerian oil industries. Extensive briefings combine it with all aspects of production, distribution and marketing, training workers, managing oil leasing, encouraging indigenous participation, ensuring uniform pricing in the local market and exploring relevant industries. Total sales of $2.6 billion in 2005 were the government's main source of income, providing jobs for more than 15,000 people. The company's history dates back to 1971, when the National Oil Company of Nigeria [NNOC] was established after the country became a member of OPEC.
Six years after the company was founded, the company changed its name to the current incarnation, and the government devolved it to nine subsidiaries in 1981. Over the next two decades, NNPC has significantly increased its financial autonomy and commercial integration entities in the ongoing attempts of several oil companies. However, even if foreign oil companies demand investment in Nigeria, NNPC faces serious challenges due to political instability, poor governance and large-scale corruption.
The evolution of NNPC to the present is also a story of serious mismanagement, serious operational failures and frequent scandals. A 1980 investigation by the Crude Oil Sales Court found that widespread violations resulted in government revenue losses of more than $2 billion. In the same year, the company became the subject of an international review, when one of the offshore oil wells involved an oil spill that killed 180 people. The relationship with international oil companies was dissatisfied with the dispute arising from the imprisonment of the Nigerian Minister of Petroleum Resources in 1990. The oil and gas sector is clearly the focus of reforms announced at the beginning of the new millennium, when the company will focus on this issue. Frequently exposed misconduct leads to widespread disdain. A series of layoffs occurred between 2003 and 2005, when thousands of employees were fired. At about the same time, NNPC enthusiastically opened several offshore drilling and gas production joint ventures.
Since its inception, the company has been responsible for the significant achievements of Nigeria's economic development:
* NNPC oversaw the country's first stake in oil production with Agip Oil Company in the mid-1960s to better utilize resources for national development.
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* It took the lead in oil exploration to confirm Nigeria's position as Africa's largest crude oil exporter in the 1970s, increasing oil revenues from 200 million euros to 10 billion euros over the past decade.
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* In 2004, NNPC announced plans to launch an ambitious West African gas pipeline to supply Nigerian natural gas to several neighboring countries.
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* Nigeria has become an important exporter of natural gas. In 2005, a liquefied natural gas plant was established in Bonny as part of an effort to end natural gas combustion by the end of this year.
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* NNPC has established a $1 billion joint venture in the offshore Agbami field to increase the country's crude oil capacity by 250,000 barrels per day.
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* Through its recent Okapi power plant, NNPC will generate the first carbon credit based on the "Kyoto Protocol" and related UN resolutions.
Although NNPC seems to be gaining more important landmarks in the next few years, its performance will face tremendous pressure from both inside and outside. The company's future depends on its ability to identify and utilize new opportunities that are consistent with Nigeria's accelerated development plans. It gives importance to almost all aspects of growth in the context of its universal basic human rights goals in Nigeria. Although the government's efforts in recent years have been devoted to reversing the country's traditional dependence on non-renewable crops, it is expected that the oil and gas industry will grow exponentially in the coming years. As oil accounts for 81% of current government revenues, NNPC plays an important role in reversing decades of economic stagnation and driving large-scale entrepreneurial growth. It seems strange that oil revenues have funded the Nigerian government's move to achieve economic diversification and a rapid corporate revolution across the non-oil sector. As NNPC is confident that it will increase its known crude oil reserves from 36 billion barrels to 50 billion barrels by 2015, the industry is becoming increasingly important.
Transforming the oil and gas industry into an engine that creates jobs, alleviates poverty and rapid national growth must be one of the fundamental goals of NNPC in the coming years. Optimizing its performance over the next decade requires a detailed review of several considerations:
* Strengthen access to capital and technology and promote independent control of joint venture investment.
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* Increase natural gas production and improve transportation to domestic and regional natural gas markets.
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* Establish strategic partnerships with global gas companies to ensure presence in the international market.
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* Achieve productivity and selective growth to improve the operational capabilities of joint ventures.
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* Rationalize the NNPC portfolio to ensure focus on high-growth potential assets.
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* Expanding the refinery and natural gas industries to help Nigeria become a regional center for petroleum products.
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* Reduce operational constitutions and discontinuation due to vandalism and violence.
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* Implement further reforms in the oil and gas industry to increase transparency and increase investor confidence.
One of the biggest challenges facing NNPC is to provide Nigerian investors with an existing and new level playing field. In this regard, the proposed oil industry bill and amendments to the country's tax period are expected to further open the sector to foreign investors.
Transforming NNPC into a commercially competitive entity will require further reforms, especially to improve internal regulators and curb corruption. Political instability is clearly one of the main obstacles to company performance, and Nigeria must ensure its independence from party or bureaucratic interference. There is no doubt that NNPC plays a key role in promoting Nigeria's economic interests. What remains to be seen is the extent to which it can deliver this promise!
Orignal From: NNPC: Achievements and Contributions of the Nigerian Economy
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