In a significant leadership reshuffle, Nigerian President Bola Tinubu has fired Mele Kyari, the Group Chief Executive of the Nigerian National Petroleum Corporation (NNPC), and installed Bayo Ojulari as the new leader of the state-owned oil giant. The change in leadership is part of a broader effort to breathe new life into Nigeria's oil and gas sector and address long-standing issues in the country's energy industry.
Bayo Ojulari Takes Over at NNPC
Bayo Ojulari, a seasoned executive with extensive experience in the oil and gas sector, will become the new Group CEO of NNPC. Ojulari had formerly served as Executive Vice President of Renaissance Africa Energy Company and Managing Director of Shell Nigeria Exploration and Production Company. His leadership will be instrumental in shepherding NNPC to realizing President Tinubu's ambitious vision for the oil and gas sector.
President Tinubu’s spokesperson, Bayo Onanuga, stated that Ojulari’s immediate priority will be to raise Nigeria’s crude oil production to 2 million barrels per day (b/d) and increase gas output to 8 billion cubic feet per day (Bcf/d) by 2027. These targets are part of a broader strategy to address Nigeria's energy challenges, including reducing the country’s reliance on imported fuels and boosting local content.
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The Fall of Mele Kyari
Mele Kyari, who was made CEO of NNPC in 2019, has been central to leading the company's repositioning following the signing into law of Nigeria's Petroleum Industry Act (PIA). Under Kyari, NNPC had made efforts to position itself as a more commercial entity than a government-owned firm. However, his tenure was also tainted with controversies, including declining oil production and issues with the planned Initial Public Offering (IPO) of NNPC that was recently cancelled.
Kyari had been instrumental in the company's transition from a government-controlled institution to a more commercialized institution. However, the recent decline in oil production and the IPO controversy have prompted the Tinubu administration to seek new leadership. The government's statement said the changes were essential for enhancing operational efficiency, growing investments, and stimulating growth in the energy sector.
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New Board Appointments and Focus on Gas and Deepwater Expertise
Alongside Ojulari’s appointment, President Tinubu has also replaced key members of NNPC’s board. The new board features a strategic emphasis on gas and deepwater oil expertise, which reflects the growing importance of these sectors in Nigeria’s oil future. Among the appointments is Ahmadu Musa Kida, a former top official at French oil giant TotalEnergies, who will serve as NNPC’s non-executive chairman.
Clementine Wallop, director for sub-Saharan Africa at consultancy Horizon Engage, commented that the new leadership team demonstrates Nigeria's priority to attract international energy companies (IECs) and restore investor confidence. Wallop added that the new board members possess the expertise that matches Tinubu's priorities in the energy sector, particularly in gas and deepwater oil development.
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Challenges in Nigeria's Oil Production and Investment Attractiveness
While Nigeria is sub-Saharan Africa's largest oil producer, it has struggled with stable production levels. Its crude and condensate production in January 2024 reached a multiyear high of 1.74 million barrels per day (b/d), but this was short-lived, and February production levels corroborated the decline. Analysts are skeptical about the long-term sustainability of production gains, with long-term issues in the shape of oil theft, pipeline sabotage, and underinvestment in infrastructure.
Nonetheless, the new management of NNPC is tasked with reversing this and expanding Nigeria's oil and gas output. At the heart of the government's strategy is to restore investors' confidence, especially following recent failures to attract new foreign investments. President Tinubu's administration has managed to bring in $17 billion of new investments in the oil sector from 2023 to 2024 and aims to increase this figure to $30 billion by 2027 and $60 billion by 2030.
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NNPC's Role in the Nigerian Economy and Gas Commercialization
NNPC is at the center of Nigeria's economy, not only in terms of oil production but also in the management of the country's vast natural gas reserves. The company also holds the mandate of managing joint ventures with major international oil companies such as Shell, Chevron, and ExxonMobil, particularly in the deepwater oilfields.
Gas commercialization is high on the agenda of the Tinubu administration, which has also identified natural gas as a key component of Nigeria's energy future. Nigeria aims to expand gas production and consumption, with a focus on raising domestic consumption and export possibilities. It is part of a broad effort to diversify Nigeria's energy sources and reduce its overdependence on crude oil.
Majors' Divestment from Onshore Assets and Concentration on Deepwater Oil
In the last couple of years, IOCs have divested some of their onshore and shallow water assets in Nigeria, particularly in the Niger Delta, which has long been plagued by crude theft, pipeline vandalism, and militancy. The divestments have seen local operators such as Renaissance, Seplat Energy, and Oando acquire the assets, an indication of changing dynamics in the Nigerian oil and gas sector.
As a result, Nigeria's deepwater oil reserves have come to the fore. IOCs have shifted focus to these offshore oilfields, where production is expected to grow over the medium to long term. The new NNPC leadership will need to prioritize these deepwater assets, ensuring they are operated efficiently to maximize Nigeria's production potential.
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Downstream Issues: Refineries and Domestic Fuel Supply
Nigerian National Petroleum Corporation also possesses four refineries with a combined capacity of 445,000 b/d. These refineries, however, have been dogged by operational issues in recent years, such as shutdowns between 2019 and 2020 and persistent technical issues. In late 2024, NNPC restarted its Port Harcourt and Warri refineries, but both have suffered outages and only made minimal contributions to local fuel supply balances.
NNPC has failed to meet its refining commitments, including to Nigeria's largest privately owned refinery, the Dangote Refinery. Although the refinery, whose capacity is 650,000 b/d, is expected to be a major contributor towards meeting the country's fuel needs, NNPC has not met its crude supply commitments. In July 2024, the state-owned oil company reduced its stake in the Dangote refinery from 20% to 7.2%, further confusing its relationship with the refinery.
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Future Outlook for NNPC and Nigeria's Oil Sector
The revamp at NNPC comes at a crucial time for Nigeria as the country seeks to inject fresh impetus into its oil and gas sector and resuscitate investors' confidence. The new leadership under Bayo Ojulari will have the double task of addressing the country's declining oil production while simultaneously focusing on gas commercialization and refining capacity.
The Nigerian government's aspiration to increase oil and gas output, attract new investments, and boost refining capacity by 2027 will require bold leadership and decisive action. By getting seasoned professionals on board NNPC, President Tinubu is showing his determination to reshape Nigeria's energy sector and ensure it remains a major player in the global oil market.
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