FG to unbundle NNPC into 30 companies next week
Fri Mar 04, 2016 08:30:am National
2.3K By sosa hills
The Federal Government has announced it will unbundle the NNPC into 30 revenue generating subsidiaries next week.It stated that the Company will operate in the upstream, midstream, downstream, and refining subsectors with own Chief Executive Officers.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who disclosed this at the 25th Oloibiri Lecture Series and Energy Forum organised by the Society of Petroleum Engineers (SPE), Nigeria Council, in Abuja, said government would next week announce a major shakeup of the corporation.
He said that the ongoing restructuring of the NNPC and cost reduction efforts of the government have reduced the corporation's losses from N160 billion monthly to N3 billion for January with the organisation set to operate profitably in June, the first time in 15 years.
Kachikwu said: "For the national oil company, a lot of work is going on; I am sure some of you have seen the effects but within the next one week, we are going to be announcing some really major overhaul of the system, one that hasn't been done in over 20 years.
"The effect of that would be to quite frankly unbundle the huge company into four to five main operational zones; the upstream, downstream, midstream, refining and of course every other companies that is trending to the venture group.
"But what is more important is that at the same time, we are also unbundling the subsets of these companies to close to about 30 independent companies with their own managing directors and so titles like the Group Executive Directors which you have been used to in the last 30 years will disappear and in place of that, you are going to have Chief Executive Officers".
"People have got to take responsibilities for the titles, they have to mean something; they are not administrative roles. So at the end of the day, a CEO of an upstream company must deliver me upstream results and we are very focused on that and along those chains, we are doing very dramatic things within the sector to bring the change and I am happy that we are gaining the cooperation of people within the industry, that is the only way we can guarantee sustainable career paths for those in the industry," he explained.
Kachikwu noted that in the light of low oil price, companies operating in the country have to work harder to reduce production costs as a way of improving profits and revenues available to the government.
This, he said, could be achieved by the deployment of new technology that makes cost more efficient.
"Cost is very important to us because I think we all got very spoilt in the era of $110 per barrel oil and we are going to focus on how we are going to cut costs.
"We set a benchmark of 30 percent cost cut in our OPEX number and determinedly using that as a guide in our CAPEX numbers by 20 percent. We are achieving that in some areas, but at the end of this year, the share reality of oil industry competition will force down the prices because the reality is that if you are not able to bring in a barrel of oil at a competitive cost, you are dead on arrival", he added.
Earlier, the Chairman of SPE, Nigeria Council, Mr. George Kalu, said the theme for the year: Technological Advances in Hydrocarbon Exploration and Exploitation: Solution to Global Oil Price Stability', was designed to elicit discussion on how operators could reduce costs.
Kalu noted that the petroleum industry players in the country must use the opportunity provided by the low cost of crude oil to reduce operational costs through industry collaboration.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who disclosed this at the 25th Oloibiri Lecture Series and Energy Forum organised by the Society of Petroleum Engineers (SPE), Nigeria Council, in Abuja, said government would next week announce a major shakeup of the corporation.
He said that the ongoing restructuring of the NNPC and cost reduction efforts of the government have reduced the corporation's losses from N160 billion monthly to N3 billion for January with the organisation set to operate profitably in June, the first time in 15 years.
Kachikwu said: "For the national oil company, a lot of work is going on; I am sure some of you have seen the effects but within the next one week, we are going to be announcing some really major overhaul of the system, one that hasn't been done in over 20 years.
"The effect of that would be to quite frankly unbundle the huge company into four to five main operational zones; the upstream, downstream, midstream, refining and of course every other companies that is trending to the venture group.
"But what is more important is that at the same time, we are also unbundling the subsets of these companies to close to about 30 independent companies with their own managing directors and so titles like the Group Executive Directors which you have been used to in the last 30 years will disappear and in place of that, you are going to have Chief Executive Officers".
"People have got to take responsibilities for the titles, they have to mean something; they are not administrative roles. So at the end of the day, a CEO of an upstream company must deliver me upstream results and we are very focused on that and along those chains, we are doing very dramatic things within the sector to bring the change and I am happy that we are gaining the cooperation of people within the industry, that is the only way we can guarantee sustainable career paths for those in the industry," he explained.
Kachikwu noted that in the light of low oil price, companies operating in the country have to work harder to reduce production costs as a way of improving profits and revenues available to the government.
This, he said, could be achieved by the deployment of new technology that makes cost more efficient.
"Cost is very important to us because I think we all got very spoilt in the era of $110 per barrel oil and we are going to focus on how we are going to cut costs.
"We set a benchmark of 30 percent cost cut in our OPEX number and determinedly using that as a guide in our CAPEX numbers by 20 percent. We are achieving that in some areas, but at the end of this year, the share reality of oil industry competition will force down the prices because the reality is that if you are not able to bring in a barrel of oil at a competitive cost, you are dead on arrival", he added.
Earlier, the Chairman of SPE, Nigeria Council, Mr. George Kalu, said the theme for the year: Technological Advances in Hydrocarbon Exploration and Exploitation: Solution to Global Oil Price Stability', was designed to elicit discussion on how operators could reduce costs.
Kalu noted that the petroleum industry players in the country must use the opportunity provided by the low cost of crude oil to reduce operational costs through industry collaboration.
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