The Nigerian National Petroleum Corporation (NNPC) has expressed cautious optimism about oil demand growth, adding that it had begun the process to diversify its portfolio beyond oil assets to hedge future crisis and align with global energy transition.
The oil firm noted that the country’s huge unharnessed gas resources as well as condensate could provide additional revenue that will address shortfall in the 2021 budget.
The Group Managing Director, NNPC, Mele Kyari, made this known on Wednesday while speaking at a virtual event, the Gulf Intelligence “Global” UAE Energy Forum 2021.
Despite optimism about oil demand, Kyari said he does not see oil demand recovering to pre-Covid19 levels before the end of 2022.
Even though oil prices are now at 11-month high, coronavirus-inspired lockdowns continue to drag on any hopes of an oil demand rebound, dampening oil price gains.
Oil prices maintained a rally yesterday, as Brent Crude rose by 0.19 per cent to $56.69 while Nigeria’s Bonny Light was up by 0.05 per cent to $54.94 a barrel at 1:41pm local time.
Kyari, also said gas would provide a more stable revenue for Nigeria.
The Federal Government had last year put the nation’s total gas reserves at 203.16 trillion cubic feet (TCF), representing a marginal increase of 1.16tcf or 0.57 per cent from the 202tcf recorded in 2019.
The 203.16 trillion cubic feet (TCF) gas reserves could have spur economic activities and boost revenue but the investments to harness the potential had remained elusive in the face gloomy regulatory outlook.
Last year, the country seal pact for the expansion of infrastructure for Liquefied Natural Gas, especially the train seven of the Nigerian LNG Limited to raise the plant’s current six-train capacity by 35 per cent, from the extant 22 million tonnes per annum (MTPA) to 30 MTPA.
The $2.6bn Ajaokuta-Kaduna-Kano gas pipeline project also progressed last year as well as a gas handling facility commissioned by NNPC in Edo State.
With the Federal Government already preparing to borrow at least N4.87 trillion to finance its N13.58 trillion 2021 budget, Kyari said gas has proven to be a steady and reliable revenue stream, especially during the height of the Covid-19 pandemic in 2020, adding that gas production and utilisation would remain a key priority for the Corporation in 2021.
He said: “NNPC has recognised the impact of energy transition and is currently diversifying its portfolio beyond oil assets through domestic gas utilisation projects, support of research and innovation, solar investments, biofuels, infrastructure and energy policy support.
“As we navigate through the COVID-19 pandemic, NNPC group will continue to focus on increasing gas production, deepening the domestic utilisation of gas, increasing our capacity to export gas and investing in our non-oil and gas businesses.”
Despite increased production, he added that Nigeria would continue complying fully with its OPEC+ commitments, saying “Nigeria is today not only complying with its quota, but also with its compensation commitments”.
Kyari said the corporation’s biggest take away from the COVID-19 pandemic was three-fold.
“Going forward, the market balance will be driven by demand and not supply. We have to do what we can to bring back the demand that was destroyed by the pandemic.
“Peak oil demand is still years away, investment is therefore required to meet Nigeria and Africa’s energy needs, and gas and renewable energy will continue to increase in their contribution to the global energy mix,” he said.
Kyari further noted that Africa would need to take advantage of the investment opportunities on the continent to grow its capacity.
Kyari, while responding to a question about whether Nigeria would potentially be looking to exit OPEC in favour of being a non-OPEC/OPEC+ member, said both cartels’ partnership are today one and the same.