New NNPC boss eyes 2 mil b/d OPEC quota, 2028 IPO in 'transformation' of state firm

Nigeria is "gunning" for a 33% OPEC quota boost to 2 million b/d by 2027, the new head of the Nigerian National Petroleum Co. said July 10, as the state firm undergoes a root-and-branch transformation characterized by new drilling, the ditching of low value assets and headway towards a long-vaunted IPO.

In a media briefing on the sidelines of the OPEC Seminar in Vienna, Bayo Ojulari, who took over as head of NNPC in April, after 30 years at Shell, said reforms and a new approach had brought Nigeria's ambitious production targets within reach.

Sub-Saharan Africa's main producer has seen output slump to under 1.5 million b/d in recent years due to underinvestment, crude theft and field maturation, causing its OPEC quota to be trimmed in early 2024.

But Ojulari said a host of key onshore and shallow water projects would lead Nigeria to 2 million b/d of oil production by 2027 -- around 1.8 million b/d of it crude -- and 3 million b/d by 2030.

They include a joint venture with Dangote Group's upstream arm on Oil Mining Lease 71 and 72, which could come online by September and add up to 40,000 b/d; an additional 20,000 b/d from First E&P's new FPSO in Bayelsa state and a 30,000 b/d project on OML 11 with Sahara Oil, with a rig in place by year-end. That block lies in Ogoniland, once plagued by spills, where nothing has been produced for 30 years.

Indeed, the region could pump 200,000 b/d of oil and 500 MMcf of gas at a minimum, he said, assuming a "sustainable alignment" with the local community.

These production increases -- in addition to hundreds of wells that Seplat and Renaissance are reviving after buying assets from ExxonMobil and Shell, respectively -- reflect the pivotal role Nigerian companies are playing in the sector, which was long the purview of export-focused IOCs, Ojulari said.

That has driven rig downtime from 40% a few years ago to less than 5% today, he said.

Additionally, a crackdown on oil theft and sabotage in the Delta -- which once cost as much as 400,000 b/d of oil -- using drones, satellites, military command centers and local community contractors, has taken pipeline availability to 100%, he said. Pipeline repairs, which once took weeks, now take 48 hours, he said.

A supply boost will strengthen Nigeria's hand with OPEC, Ojulari added, when it comes to 2027 quotas.

"We would be pushing towards a 2 million b/d [target] -- an additional 500,000 barrels -- to give us the freedom and bandwidth," he said. "There will be conversations but...that's what we are gunning for."

He added that work on domestic refineries, from the 650,000 b/d privately owned Dangote refinery to smaller modular plants and legacy NNPC facilities, were poised to take domestic oil demand towards 1 million b/d by 2027, meaning a quota boost would not seriously affect its supply to the international market.

Quantum leap

A 2 million b/d OPEC quota would mark a quantum leap for Nigeria, which has watched investment pour into frontiers like Namibia and Guyana and regional rivals such as Angola in recent years.

It reflects Ojulari's plans for a makeover of NNPC, aided by the country's recent Petroleum Industry Act, from a quasi-regulator into an "agile" private sector player focused on performance and transparency.

"The PIA has [handed] the regulatory role very clearly to two regulators...which frees up NNPC to focus on commerciality," he said, adding that he can now raise financing for NNPC, rather than relying for government handouts, which previously left the company unable to finance its JV interests.

He conceded, too, that approvals of some IOC exits from mature onshore fields "took too long," particularly the ExxonMobil-Seplat deal, which NNPC challenged legally prior to his tenure. Since quitting the Delta, IOCs have focused on the more challenging deepwater.

Top of mind for Ojulari is a review to "high-grade our portfolio", which should see less valuable acreage farmed down or ditched.

The company is also advancing towards a long-hyped IPO in 2028, Ojulari said, with London, New York and Lagos in his sights. Ojulari said he would not look to list less than 20% of the company.

'Sunk cost syndrome'

On the downstream side, Ojulari said NNPC was looking to grow its stake in the privately-owned Dangote Refinery, which was billed as a ticket to energy self-sufficiency for Nigeria.

The state firm currently holds 7.2% of the refinery, having seen its interest trimmed in 2024 amid crude supply issues and reports of strained ties between Dangote and the government.

The NNPC still has an obligation to supply some three cargoes a month to the plant, Ojulari said, which are paid in naira, after which they resort to a "willing buyer, willing seller" approach. Dangote has purchased crude from the US, Brazil and elsewhere.

"We have good collaboration with Dangote. We're able to manage those tensions whenever they come," he said. "It will take a little while for us to stabilize."

He also hopes the country's modular refineries will reach a combined 400,000 b/d capacity, but efforts to revive idled state refineries, such as Kaduna, Warri and Port Harcourt are currently on hold, Ojulari said.

"We need to review," he said, to avoid being "victims of sunk cost syndrome," adding that a life cycle study would be concluded this year.

Work is also required on the government's crude supply obligation, he added, which has ruffled feathers in the upstream sector, insiders say. There is little clarity over how much oil companies should supply to local refineries and in which currency.

"It's a very good principle...[but it's] how we implement it," Ojulari said, noting that the naira had stabilized since being allowed to float by President Bola Tinubu.

"None of the IOCs that I've spoken to have issues supplying domestically, they just want a fair deal," he added. Unhappy investors would amount to a failure, he said.

Gas plans

In another shift for oil-focused NNPC, Ojulari said the company's "big game is gas," particularly on the downstream side, where it is rolling out CNG stations and attempting to deliver LPG to every home.

It is also hoping to boost domestic gas production from 7.5 Bcf/d today to 10 Bcf/d by 2027 and 12 Bcf/d by 2030, and supply gas for power generation and industry through the upcoming AKK and OB3 gas pipelines.

Directional drilling technology has sped up work on OB3, he said, while the north-south AKK pipeline should be commissioned in mid-2026, offering a major industrial boost.

On the upstream gas side, NNPC is banking on "locked-in" resources held by Seplat and Chevron -- amounting to a combined 300 MMcf/d -- as well as gas in OML 35 and Renaissance's acreage.

Challenges remain across the board, Ojulari said, including the loss of service contractors during the previous drilling doldrums. But, he said, a radical shift of approach at the NNPC could revive Nigeria's oil fortunes.

"Change is not easy," he said, adding that "transforming a company and a country that has been operating in a particular mode for so many years into the dream company that we are talking about" would not happen overnight.