Industry

Umar Ajiya, chief financial officer, NNPC. (Image source: NNPC)

The Nigerian National Petroleum Corporation (NNPC) has declared a net profit of N3.297 trillion for the year ended December 2023 in its 2023 audited financial statement (AFS)

This marks not only an increase of more than N700bn (28%) when compared to the 2022 profit of N2.548 trillion, but also the company's best performance since its inception in 1977. 

NNPC has been on a consistent growth curve from 2020, when it posted its ‘first ever’ profit of N287bn, followed by a record N674.1bn profit in 2021. The corporation is now looking to announce an initial public offer (IPO) following approval from shareholders and members of the board.

Strategic foresight and operational resilience

“Our fiscal performance reflects both strategic foresight and operational resilience. Despite inherent challenges of our operational and economic environment, we have improved the productivity and the financial performance of this great company,” said Umar Ajiya, chief financial officer, NNPC.

Ajiya attributed the positive results to the Petroleum Industry Act (PIA) 2021, which safeguards national energy security and profitability even while ensuring investor interests. Holders can benefit massively from new fiscal provisions and tax rate under the PIA if they consider conversion from oil prospecting license (OPL) to petroleum prospecting license (PPL) and from oil mining lease (OML) to petroleum mining lease (PML). Upon conversion from OPL to PPL, holders are liable to pay 15% instead of 65.75% as previously mandated by the Petroleum Profits Tax Act (PPTA), and 30% instead of 85% for holders converted from PML to OML, both applicable to onshore and shallow water areas.

NNPC holds a 60% interest in OML 102 that is located in shallow waters, housing the Ntokon oil and gas field from where the 40% shareholder TotalEnergies announced promising discoveries in June. 

TotalEnergies has renewed its production license in OML 130 in May for a further 20 years, bringing its operations under the terms of the PIA. Sanctioning deepwater projects as per the new regime is crucial to boosting Nigeria's production output, which NNPC is targeting at 2mn barrels per day by the end of the year.

Last year, Nigeria has attracted international interests for gas exploration from countries such as Argentina. 

With the final investment decision (FID) reached in July by TotalEnergies, as the operator of OML 58 onshore license with a 40% interest, for the development of the Ubeta gas field, where NNPC holds a 60% interest, the corporation is up to a steady start to expect healthy financial results in the coming years. 

Contracts with multiple scopes accounted for 9%. (Image source: GlobalData)

Global oil and gas contract activity witnessed a notable 47% quarter-on-quarter increase in total disclosed value to reach US$54.91bn in Q2 2024 from US$37.3bn in Q1, reveals GlobalData

The data and analytics company's latest report, 'Oil and Gas Industry Contracts Review by Sector, Region, Terrain and Top Contractors and Issuers, Q2 2024', reveals that the overall oil and gas contracts volume decreased marginally from 1,473 in Q1 2024 to 1,377 in Q2 2024. 

Pritam Kad, oil and gas analyst at GlobalData, said, “Petrobras' monumental awards, including the US$8.15bn P-84 and P-85 FPSO construction contract to Seatrium, the US$1.8bn contract for subsea engineering to the Sapura consortium, and an additional US$2.5 billion for pipelay vessels, rigid risers, and flowlines contracts to Subsea 7, were the driving forces behind the surge in the overall oil and gas contracts value.”

Operation and Maintenance (O&M) scope reported 681 contracts, accounting for 49% of the total contracts in Q2 2024, followed by procurement with 400 contracts representing a 29% share. Contracts with multiple scopes, such as construction, design and engineering, installation, O&M, and procurement, accounted for 9% of the contracts. 

Of the biggest contracts signed in Africa during this period, Saipem was signed in by TotalEnergies to cover SURF, FPSO and O&M scopes. 

Deals in Middle East and Africa

The other notable contracts include Samsung Engineering, GS Engineering & Construction, and Nesma & Partners’ $7.7 billion EPC contract from Saudi Aramco for Fadhili Gas plant expansion from 2.5 to up to 4 billion standard cubic feet per day (bscfd) in Saudi Arabia; Tecnimont-led consortium’s US$2.3bn EPC contract from Sonatrach for three gas boosting stations with 20 turbo-compressor trains in Algeria; and Saipem’s US$850mn rigid pipelines, flexible flowlines, jumpers, and umbilicals work for Azule Energy’s Ndungu field development in Angola. 

In Senegal, a subsea inspection, maintenance, and repair (IMR) services framework agreement for the Sangomar offshore field was signed between Woodside Energy and DeepOcean as recently as in June. 

Collaboration in petroleum, natural gas and infrastructure were explored. (Image source: Minister of Petroleum and Mineral Resources)

Egypt's Minister of Petroleum and Mineral Resources Karim Badawi received Dimitrios Copelouzos, chairman of the Greek Copelouzos Group, and Ioannis Karydas, CEO of the Group for Renewable Energy, Energy Storage and Interconnection

Areas of potential collaborations and investment opportunities available in the petroleum sector, natural gas and infrastructure were explored.
Badawi confirmed that Egypt's oil sector is conducting intensive research to increase exploration programmes. The plan is to achieve new discoveries that can potentially lead to increased production. The gfovernment is also working towards meeting local demand to relieve pressure on the import bill.
Badawi emphasised Egypt's strong infrastructure that has the potential to make it a regional energy centre. He confirmed that work is underway to explore investment opportunities in the hydrocarbons sector to serve the diversification of energy resources. The country is ready to initiate a multi-phase green hydrogen project that involves bp and Masdar, among others. 

Strong natural gas infrastructure

Copelouzos confirmed that Egypt is able to create a bright future in the field of natural gas by taking advantage of the strong infrastructure it has, especially the gas machine factories. This established the Group's interests to participate in any new tenders that Egypt might launch in the near future. He also referred to the electrical interconnection project between Egypt and the European Union among the most significant ones currently being implemented in Europe.
The meeting was also attended by Yas Mohamed, head of the Egyptian Natural Gas Company, and Moataz Atef, assistant head of Egas for the technical office, Special Projects and Operational Safety. 

In April, the Ministy of Petroleum and Mineral Resources signed a memorandum of understanding (MoU) with Equador, which was keen on exploring the North African country's oil and gas resources. 

Rigless testing in Morocco. (Image source: Adobe Stock)

In an operations update, Predator Oil & Gas Holdings has announced the commencement of rigless testing in Morocco 

This introduces the Sandjet and coiled tubing technology in Morocco. Sandjet rigless testing tools and chemicals required for rigless testing operations were imported into Morocco following customs clearance documentation issued on 12 June.

The remaining rigless testing equipment was imported after customs clearance was granted on 2 August 2024. This comprised primarily the Baker Hughes logging and coiled tubing units which were sourced from the Netherlands. 

The Company's rigless testing operations commenced before 5 June 2024 with site preparations at MOU-3 with initial customs clearances received on 12 June 2024 to import the Sandjet testing tools and chemicals. Unfortunately it was beyond management's control that the programme would be subsequently impacted by the ratification required to approve entering the First Extension Period with a corresponding delay in receiving further customs clearances.

While a delay couldn't be avoided due to reasons beyond management's control, the company maintained the ability to utilise the key rigless testing equipment and services within its available time slot for exclusive use.

Paul Griffiths, executive chairman of Predator, said, "It goes without saying that the last 12 months following the achievement of the MOU-3 and MOU-4 drilling programmes has been immensely frustrating for Directors, Management and shareholders alike. Planning for rigless testing has been impacted by several amendments to the Initial Period of the Guercif Petroleum Agreement, whilst trying to balance access to limited well services and equipment caused by global competition. Ours is a big operation for Morocco but not by global standards. We have to be patient and creative.

"However, by entering the First Extension Period we can look forward to re-establishing our operational momentum and newsflow.

"Our near-term ability to supply CNG to the Moroccan industry is more advanced than other possible options. The Company is debt-free which allows it to have greater flexibility when considering different options, including M&A transactions and a partial divestment, for the modest levels of development finance required for 'First Gas'. This is why Afriquia Gaz remains heavily engaged with the Company and supportive of our efforts to get gas to market at the very earliest opportunity."