About NNPC

In addition to its exploration activities, the Corporation was given powers and operational interests in
refining, petrochemicals and products transportation as well as marketing. Between 1978 and 1989,
NNPC constructed refineries in Warri, Kaduna and Port Harcourt and took over the 35,000-barrel Shell
Refinery established in Port Harcourt in 1965.

In 1988, the NNPC was commercialised into 12 strategic business units, covering the entire spectrum of
oil industry operations: exploration and production, gas development, refining, distribution,
petrochemicals, engineering, and commercial investments. Currently, the subsidiary companies include:
 National Petroleum Investment Management Services (NAPIMS)
 Nigerian Petroleum Development Company (NPDC)
 The Nigerian Gas Company (NGC)
 The Products and Pipelines Marketing Company (PPMC)
 Integrated Data Services Limited (IDSL)
 Nigerian LNG limited (NLNG)
 National Engineering and Technical Company Limited (NETCO)
 Hydrocarbon Services Nigeria Limited(HYSON)
 Warri Refinery and Petrochemical Co. Limited (WRPC)
 Kaduna Refinery and Petrochemical Co. Limited(KRPC)
 Port Harcourt Refining Co. Limited (PHRC)
In addition to these subsidiaries, the industry is also regulated by the Department of Petroleum Resources
(DPR), a department within the Ministry of Petroleum Resources. The DPR ensures compliance with
industry regulations; processes applications for licenses, leases and permits, establishes and enforces
environmental regulations. The DPR, and NAPIMS, play a very crucial role in the day to day activities
throughout the industry
Nigerian Gas Master Plan
As part of Nigeria's resolve to become a major international player in the international gas market as well
as to lay a solid framework gas infrastructure expansion within the domestic market, the Nigerian Gas
Master Plan was approved on February 13 2008.

The Master-Plan is a guide for the commercial exploitation and management of Nigeria’s gas sector.
It aims at growing the Nigerian economy with gas by pursuing three key strategies:

1. Stimulate the multiplier effect of gas in the domestic economy

2. Position Nigeria competitively in high value export markets, and

3. Guarantee the long term energy security of Nigeria

NNPC Management
The NNPC Group comprises of the NNPC Board, the Group Managing Director's office, eight directorates
namely, Exploration & Production, Refineries & Petrochemical, Finance & Accounts and Corporate
Services, Commercial & Investment, Engineering & Technology, Gas & Power and Special Duties. Each
of the Directorates is headed by a Group Executive Director (see pictures below). Its Divisions are
headed by Group General Managers while its ten subsidiary companies are headed by Managing
Directors. NNPC has two partly owned subsidiaries and 16 associated companies.
Mr. Augustine O. Oniwon (GMD) Mrs. Diezani Alison-Madueke (Minister of Petroleum
Resources/Chairperson)
 NNPC Mission Vision and Core Values
Vision

NNPC wiil be a world-class oil and gas company driven by shared commitment to excellence.

Mission

NNPC is an integrated Oil and Gas Company, engaged in adding value to the nation’s hydrocarbon
resources for the benefit of all Nigerians and other stakeholders.

Core Values
 Respect for the Individual
 Staff development and growth
 Integrity, transparency and accountability
 Proffesional Excellence
Corporate Social Responsibility
The NNPC, recognizing the importance of education to the development of our dear country, six years
ago, introduced the annual national quiz competition for secondary schools across the country.
The competition starts from the state level and moves to the zonal level where a zonal winner emerges
from the six geo-political zones in the country. Winners from the six zones compete at the grand finale
and representatives of the winning state are awarded scholarships for their tertiary education by the
NNPC apart from other mouth-watering prizes given to the best three states.

The competition is considered by the NNPC as a development process and encouragement of excellence
amongst secondary school students across the country who is the future leaders of this great nation.

The decision by the NNPC to sponsor the national quiz competition is part of its corporate social
responsibility and in furtherance of its quest to touch the lives of Nigerians in many positive ways

Upstream Activities Midstream Downstream Activities

 Exploration Activities  Retail Services
 Oil Production  Greenfi  Product Distribution
 Gas Production eld  Investment Opportunities
 Joint Venture Activities Refiner  Research & Development
y
Initiativ
e
 Refiner
ies &
Petroc
hemica
ls
 Nigeria
n Gas
Master
plan
 Renew
able
Energy
 Gas &
Power
 Engine
ering &
Techno
logy
 Deep Water Exploration
From the very beginning of oil exploration in Nigeria in 1937, till early 1993, virtually all exploration and
production activities were restricted to land and swamps. Where prospecting ventured offshore, it was in
areas not greater than 200m water depth.
But then in 1993, the Federal Government opened up a new frontier in oil and Gas exploration, heralding
the bright prospects of a promising future, by allocating some offshore blocks in water depths reaching
2500m. these deep water depth and plans for even greater depths than 2500m will undoubtedly impact
positively the country’s production and reserve blueprint. Though these deep water operations are
technically challenging and massively capital intensive, experience multinational companies have been
awarded some deep offshore blocks and even ultra deep concessions. By the end of 1998, the deep
water operators in Nigeria had achieved the following:

 Acquisition of21,000 km 2D Seismic Lines

 Acquisition of21,500 km 3D Seismic Lines
 Drillingof33 exploration/appraisal wells in depths ranging from 300-1460m.

Even better news is significant discoveries reported by most of the operators. Little wonder then, that
against a commitment of $864 million USD for the first 6 (six) years of deep water prospecting under a
PSC (production sharing contract) the industry has invested approximately $1.3 billion USD up to the end
of 1998.

Operators have, indeed, continued aggressive exploration activities virtually in spite of the volatile global
petroleum atmosphere of recent times, and long lead times from discovery, production and sales.

The technical challenges of deep and ultra-deep water depths has meant a number of less than 20 wells
drilled worldwide in water depths greater than 1000m. Expectedly, since most of the deep water activity in
Nigeria is in, so called, virgin territory, thereby lacking infrastructural support and services, the cost of
prospecting is extremely high.

This is however ameliorated and set off against the PSC with the Federal Government of Nigeria under
the aegis of the NNPC.
Oil Production
NNPC upstream operations are in joint partnerships with the major oil companies. These multi-national E
& P companies are operating predominantly in the on-shore Niger Delta, coastal offshore areas and lately
in the deepwaters. As with many other developing countries, the multinationals in Nigeria had been
operating under what is called a concession system, with NNPC being the concessionaire, while the
companies are the operators. NNPC also is responsible for the management of the exploration bidding
rounds for oil and gas.

The multinational oil companies operate in partnership with NNPC under Joint Operating Agreements
(JOAs) or Production Sharing Contracts (PSCs). Others, especially the indigenous oil companies, operate
in partnership with international companies under sole risk or as independents. Nigeria's petroleum
industry is well grounded in successful exploration, beginning with the first commercially viable discovery
at Oloibiri in the Niger Delta in 1956, with a modest production rate of 5,100 barrels per day. Reserves of
crude oil stand at 28.2 billion barrels. Natural gas reserves total 165 trillion standard cubic feet (scf),
including 75.4 trillion scf of nonassociated gas.

An important ingredient in NNPC's exploration success is the Integrated Data Services Ltd (IDSL), a
subsidiary of NNPC. IDSL is one of the largest and most advanced earth science facilities in Africa. Field
data is sent to IDSL for analysis using advanced computer systems, giving the company the critical edge
in its upstream operations. IDSL processes and interprets in 3-D configurations data from the
hydrocarbon reservoirs. This technological capability is instrumental in developing reservoir management
strategies, which provide optimum recovery rates over the life of a field.
 IDSL has been responsible for most of the country's major oil discoveries and is continuing an intensive
exploration programme to increase the nation's hydrocarbon reserves.

PRODUCTION
With a maximum crude oil production capacity of 2.5 million barrels per day, Nigeria ranks has Africa's
largest producer of oil and the sixth largest oil producing country in the world. Nigeria appears to have a
greater potential for gas than oil. Nigeria's gas production in the year 2000 was approximately 1,681.66
billion scf, 1,3715 billion scf was associated gas and the rest 310.16 billion was nonassociated gas.
Nigeria produces only high value, low sulphur content, light crude oils - Antan Blend, Bonny Light, Bonny
Medium, Brass Blend, Escravos Light, Forcados Blend, IMA, Odudu Blend, Pennington Light, Qua-Iboe
Light and Ukpokiti.
NNPC through its subsidiary the Nigerian Petroleum Development Company (NPDC) is directly
responsible for four oil and gas fields with a total production of 15,000 bpd.

Gas Production

NNPC's vision is to make Nigeria the leading Liquified & Natural Gas (LNG) producing nation in the world
and to promote sufficiency in the domestic power supply.

We intend to acheive this goal by monitoring the commercialization of Nigeria’s abundant natural gas
reserves, reducing gas flaring, promoting viable LNG projects, power plants and associated gas projects.
The Federal Government has set the following objectives for NNPC as regards Gas production:
 To monitor and expedite the commercialization and the development of Natural Gas for Domestic and
Export markets
 To protect the Federal Government interest in LNG & IPP ventures
 To monitor and support all LNG and Independent Power Plants (IPP) ventures
 To support NNPC Human Resource capacity building
 To work towards achieving and sustaining “zero” flaring of Associated Gas
 Promote the Nigerian Content initiative

 Joint Venture Activities


 NNPC upstream operations are in joint partnerships with the major oil companies. These multi-national
Exploration & Production companies are operating predominantly in the on-shore Niger Delta, coastal
offshore areas and lately in the deepwaters.

As with many other developing countries, the multinationals in Nigeria had been operating under what is
called a concession system, with NNPC being the concessionaire, while the companies are the operators.

NNPC also is responsible for the management of the exploration bidding rounds for oil and gas.
 The multinational oil companies operate in partnership with NNPC under Production Sharing Contracts
(PSCs).

 Renewable Energy

 Since civilization man has met his energy needs one way or the other. Modern man has depended largely
on fossil fuel which is non renewable and has been the major cause of greenhouse gas emissions
thereby degrading the environment. In 2005 a presidential directive was given to the NNPC for the
exploration of Renewable Energy as a source of energy i.e. energy that is replaced by a natural process
 at a rate that is equal to or faster than the rate at which that resource is being consumed. This led to the
creation of the Renewable Energy Division (RED) of the NNPC in August 2005. The Division is to midwife
the birth of renewable energy initiatives of the NNPC. This is consistent with the dictates of the Kyoto
protocol of which Nigeria is a signatory.

NNPC is to spearhead the launch of a bio-fuel program for Nigeria which aims at creating a sustainable
domestic industry by integrating the energy and agricultural sectors of the country. The rationale for the
program, which is aimed at growing a thriving home grown industry includes; providing jobs and economic
empowerment to rural communities, reducing Nigeria’s dependence on fossil fuels and protecting the
environment while participating in the Clean Development Mechanism (CDM) program.

The NNPC through the RED has initiated the Automotive Bio-fuel program for the production of fuel-
ethanol and bio-diesel that would be blended with PMS (Premium Motor Spirit) otherwise know as Petrol
and AGO (Automotive Gas Oil), in proportions not exceeding 10% volume. The resulting new fuel which is
to be called “Green Gasoline” will reduce the volume of carbon dioxide released into the atmosphere,
improve air quality and ultimately reduce global warming and its catastrophic consequences
 Gas & Power

 As part of Nigeria's resolve to become a major international player in the international gas market as well
as to lay a solid framework gas infrastructure expansion within the domestic market, the Nigerian Gas
Master Plan was approved on February 13 2008.

The Master-Plan is a guide for the commercial exploitation and management of Nigeria’s gas sector.
It aims at growing the Nigerian economy with gas by pursuing three key strategies:

1. Stimulate the multiplier effect of gas in the domestic economy

2. Position Nigeria competitively in high value export markets, and

3. Guarantee the long term energy security of Nigeria

 Engineering & Technology

 NNPC uses state of the art technologies to provide support services to all arms of the corporation and
some external client. Its engineering and technology services include Information technology,
telecommunications, Basic/Detailed Engineering, Procurement, construction Supervision and Engineering
Project Management

The Petroleum Industry Bill

Long Title: An Act to establish the legal and regulatory framework, institutions and regulatory
authorities for the Nigerian petroleum industry, to establish guidelines for the operation of the
upstream and downstream sectors, and for purposes connected with the same.

FUNDAMENTAL OBJECTIVES
1. Vesting of petroleum and natural gas
Property and sovereign ownership of petroleum within Nigeria, its territorial waters, the
continental shelf, the Exclusive Economic Zone and the extended continental shelf shall vest in
the sovereign state of Nigeria for and on behalf of the people of Nigeria.
2. Allocation of Acreage
Any company qualified under terms and conditions prescribed from time to time by the relevant
Institutions shall be free to apply for the grant or award of a license, lease or contract, as the case
may be, for the exploration and production of petroleum. Management of Petroleum Resources
3. (1) The management and allocation of petroleum resources and their derivatives in Nigeria shall
be conducted strictly in accordance with the principles of good governance, transparency and
sustainable development of Nigeria. (2) Subject to subsection (1) of this section, the main
criterion for the management of petroleum resources shall be the total benefits that will accrue to
the sovereign state of Nigeria.
4. Government Participation
(1) The Minister shall grant licences and leases on the recommendation of the Directors General
of the Institutions and in accordance with guidelines, impose special terms and conditions that are
not inconsistent with the provisions of this Act on any licence or lease to which this Act applies,
 including terms and conditions as to: (a) participation by the Federal Government in the venture
to which the licence or lease relates, on terms to be negotiated between the Minister and the
applicant for the licence or lease; and (b) exploitation of any natural gas discovered. (2)
Subsection (1) of this section shall not apply to any indigenous company operating in the
upstream sector whose aggregate production is less than or equal to fifty thousand barrels per
day of crude oil or natural gas equivalent.
5. In achieving their functions and objectives under this Act, the Institutions and the National Oil
Company shall be guided by principles of the Nigerian Extractive Industries Transparency
Initiative Act of 2007.
6. Environment and Air Quality Emissions
(1) The Federal Government shall, to the extent practicable, honour international environmental
obligations and shall promote energy efficiency, the provision of reliable energy, and a taxation
policy that encourages fuel efficiency by producers and consumers. (2) In accordance with the
provisions of subsection (1) of this section, the Federal Government shall introduce and enforce
integrated health, safety and environmental quality management systems with specific quality,
effluent and emission targets for oil and gas related pollutants, without regard for fuel type such
as gas, liquid or solid, in order to ensure compliance with international standards.
7. Community Development
The Federal Government shall, in co-operation with the state and local governments and
communities, encourage and ensure the peace and development of the petroleum producing
areas of the Federation through the implementation of specific projects aimed at ameliorating the
negative impacts of petroleum activities.
Nigerian Content
(1) The Federal Government shall at all times promote the involvement of indigenous companies and
manpower and the use of locally produced goods and services in all areas of the petroleum industry in
accordance with existing laws and policies. (2) Where any contract for work or services is considered to
be within the capabilities of Nigerian companies, in accordance with any law relating to Nigerian content,
the tender list shall be restricted to Nigerian companies. (3) All companies involved in any area of the
upstream or downstream petroleum industry shall, as a condition of their licence, lease, contract or
permit, as the case may be, comply with the terms and conditions of any law relating to the Nigerian
content law in force at the time. (4) Failure to comply with the terms of any local content law as
determined by the Inspectorate shall be a ground for revocation of a licence, lease, contract or permit that
may have been previously granted to the company that failed to comply with the said terms.
History of the Nigerian Petroleum Industry
Oil was discovered in Nigeria in 1956 at Oloibiri in the Niger Delta after half a century of exploration. The
discovery was made by Shell-BP, at the time the sole concessionaire. Nigeria joined the ranks of oil
producers in 1958 when its first oil field came on stream producing 5,100 bpd. After 1960, exploration
rights in onshore and offshore areas adjoining the Niger Delta were extended to other foreign companies.
In 1965 the EA field was discovered by Shell in shallow water southeast of Warri.

In 1970, the end of the Biafran war coincided with the rise in the world oil price, and Nigeria was able to
reap instant riches from its oil production. Nigeria joined the Organisation of Petroleum Exporting
Countries (OPEC) in 1971 and established the Nigerian National Petroleum Company (NNPC) in 1977, a
state owned and controlled company which is a major player in both the upstream and downstream
sectors.

Following the discovery of crude oil by Shell D’Arcy Petroleum, pioneer production began in 1958 from
the company’s oil field in Oloibiri in the Eastern Niger Delta. By the late sixties and early seventies,
Nigeria had attained a production level of over 2 million barrels of crude oil a day. Although production
figures dropped in the eighties due to economic slump, 2004 saw a total rejuvenation of oil production to a
record level of 2.5 million barrels per day. Current development strategies are aimed at increasing
production to 4million barrels per day by the year 2010.

Petroleum production and export play a dominant role in Nigeria's economy and account for about 90% of
her gross earnings. This dominant role has pushed agriculture, the traditional mainstay of the economy,
from the early fifties and sixties, to the background.

Major Events in the history of the Nigerian Oil and Gas

1908
Nigerian Bitumen Co. & British Colonial Petroleum commenced operations around Okitipupa.

1938
Shell D' Arcy granted Exploration license to prospect for oil throughout Nigeria.

1955
Mobil Oil Corporation started operations in Nigeria.
1956
First successful well drilled at Oloibiri by Shell D'Arcy

1956
Changed name to Shell-BP Petroleum Development Company of Nigeria Limited.

1958
First shipment of oil from Nigeria.

1961
Shell's Bonny Terminal was commissioned.
Texaco Overseas started operations in Nigeria.

1962
Elf started operations in Nigeria. (As Safrap)
Nigeria Agip Oil Company started operations in Nigeria

1963
Elf discovered Obagi field and Ubata gas field
Gulf's first production

1965
Agip found its first oil at Ebocha
Phillips Oil Company started operations in Bendel State

1966
Elf started production in Rivers State with 12,000 b/d

1967
Phillips drilled its first well (Dry) at Osari –I
Phillips first oil discovery at Gilli-Gilli -I

1968
Mobil Producing Nigeria Limited) was formed.
Gulf's Terminal at Escravos was commissioned

1970
Mobil started production from 4 wells at Idoho Field
Agip started production
Department of Petroleum Resources Inspectorate started.

1971
Shell's Forcados Terminal Commissioned
Mobil's terminal at Qua Iboe commissioned

1973
First Participation Agreement; Federal Government acquires 35% shares in the Oil Companies
Ashland started PSC with then NNOC (NNPC)
Pan Ocean Corporation drilled its first discovery well at Ogharefe –I

1974
Second Participation Agreement, Federal Government increases equity to 55%.
Elf formally changed its name from "Safrap"
Ashland's first oil discovery at Ossu –I

1975
First Oil lifting from Brass Terminal by Agip
DPR upgraded to Ministry of Petroleum Resources

1976
MPE renamed Ministry of Petroleum Resources (MPR)
Pan Ocean commenced production via Shell-BP's pipeline at a rate of 10,800 b/d

1977
Government established Nigerian National Petroleum Corporation (NNPC) by Decree 33, (NNOC & MPR
extinguished).

1979
Third Participation Agreement (throughout NNPC) increases equity to 60%
Fourth Participation Agreement; BP's shareholding nationalised, leaving NNPC with 80% equity and Shell
20% in the joint Venture.
Changed name to Shell Petroleum Development Company of Nigeria (SPDC)

1984
Agreement consolidating NNPC/Shel1 joint Venture.

1986
Signing of Memorandum of Understanding (MOU)

1989
Fifth Participation Agreement; (NNPC=60%, Shell = 30%, Elf=5%, Agip=5%).

1991
Signing of Memorandum of Understanding & joint Venture Operating Agreement (JOA)

1993
Production Sharing Contracts signed -SNEPCO
Sixth Participation Agreement; (NNPC=55%, Shell=30%, Elf= 10%, Agip=5%).
The coming on-stream of Elf's Odudu blend, offshore OML 100.

1995
SNEPCO starts drilling first Exploration well.
NLNG's Final Investment Decision taken

1999
NLNG's First shipment of Gas out of Bonny Terminal.

2000
NPDC/NAOC Service Contract signed

2001
Production of Okono offshore field.

2002
New PSCs agreement signed.
Liberalisation of the downstream oil sector.
NNPC commences retail outlet scheme

Development of Nigeria's Oil Industry

The advent of the oil industry can be traced back to 1908, when a German entity, the Nigerian Bitumen
Corporation, commenced exploration activities in the Araromi area, West of Nigeria. These pioneering
efforts ended abruptly with the outbreak of the First World War in 1914.

Oil prospecting efforts resumed in 1937, when Shell D'Arcy (the forerunner of Shell Petroleum
Development Company of Nigeria) was awarded the sole concessionary rights covering the whole
territory of Nigeria. Their activities were also interrupted by the Second World War, but resumed 1947.
Concerted efforts after several years and an investment of over N30 million, led to the first commercial
discovery in 1956 at Oloibiri in the Niger Delta.

This discovery, opened up the Oil industry in 1961, bringing in Mobil, Agip, Safrap (now Elf), Tenneco and
Amoseas (Texaco and Chevron respectively) to join the exploration efforts both in the onshore and areas
of Nigeria. This development was enhanced by the extension of the concessionary rights previously a
monopoly of Shell, to the newcomers. The objective of the government in doing this, was to he pace of
exploration and production of Petroleum. Even now more companies, both foreign and indigenous have
won concessionary rights and are producing. Actual oil production and export from the Oloibiri field in
present day Bayelsa State commenced in 1958 with an initial production rate of 5,100 barrels of crude oil
per day. Subsequently, the quantity doubled the following year and progressively as more players came
onto the oil scene, the production rose to 2.0 million barrels per day in 1972 and a peaking at 2.4 million
barrels per day in 1979. Nigeria thereafter, attained the status of a major oil producer, ranking 7th in the
world in 1972, and has since grown to become the sixth largest oil producing country in the world.

CURRENT STATUS OF THE PETROLEUM INDUSTRY IN NIGERIA

Sedimentary Basins
Table 1, lists Nigeria's 7 main sedimentary basins with some information on size and prospectivity, main
reservoirs, exploration status etc. The core producing areas cover some 60% of the total acreage of about
31,105 sq. km. The outlying areas remain a significant asset yet to be exploited.

Oil and Gas Reserves

A 2003 estimate showed recoverable crude oil reserves at 34 billion barrels. The reserve base is
expected to increase due to additional exploration and appraisal drilling. Already, over 900 million barrels
of crude oil of recoverable reserves have been identified. The government has also set a target to achieve
a reserve of 40 billion barrels by 2010.

Nigeria has an estimated 159 trillion cubic feet (Tcf) of proven natural gas reserves, giving the country
one of the top ten natural gas endowments in the world. Due to a lack of utilization infrastructure, Nigeria
still flares about 40% of the natural gas it produces and re-injects 12% to enhance oil recovery. Official
Nigerian policy is to end gas flaring completely by 2008. The World Bank estimates that Nigeria accounts
for 12.5% of the world's total gas flaring. Shell estimates that about half of the 2 Bcf/d of associated gas --
gaseous by-products of oil extraction -- is flared in Nigeria annually. The new industry strategy is to collect
the associated gas and process it into liquefied natural gas (LNG), greatly enhancing Nigerian natural gas
revenues while simultaneously reducing carbon dioxide emissions

Oil Fields
Of the 606 oil fields in the Niger Delta area, 355 are on-shore while the remaining 251 are offshore. Of
these, 193 are currently operational while 23 have been shut in or abandoned as a result of poor
prospectivity or total drying up of the wells. Outside the Niger Delta, a total of 28 exploratory oil wells have
been drilled all showing various levels of prospectivity as seen in Table 2. These wells include two (2)
discovery wells in Anambra State, one (1) discovery well each in Edo State and Benue State each and
Twenty-four (24) wells in the Chad Basin. However, production is yet to commence from any of the wells.

Nigerian liquefied Natural Gas

The Nigerian LNG project is being implemented in phases with an initial production from two trains. The
plant is situated at Bonny Island. NLNG has successfully secured market for its moderate production
volume from its base project and train three.

Sources of Gas:

The bulk of the gas for base project is mainly NAG supplied from the following gas supplier fields:

SPDC - SOKU;
NAOC - OBIAFU OBIKROM;
EPNL - OBITE;
The bulk of gas for train three will contain more of associated gas from which both LNG and LPG will be
produced.

Gas Supply Contract:

The NLNG had signed Gas Supply Agreements (GSAs) with three upstream gas producers in 1992. This
is aimed at securing adequate and regular supply of gas for the project. These gas producers are:

The Shell Petroleum Development Company of Nigeria Limited (SPDC) - NNPC/SPDC/NAOC/EPNL JV:
operator & sellers' representative - SPDC (Shell affiliate);
Nigerian Agip Oil Company limited (NAOC) - NNPC/NAOC/POCNL JV: operator & sellers' representative
- NAOC (Agip affiliate);
ELF Petroleum Nigerian limited (ELF), (then Elf Nigerian Limited) - NNPC/EPNL JV: operator & sellers'
representative - EPNL (Elf affiliate).
These three joint ventures are expected to supply the gas requirement for the project for the next 221/2
years.

Gas Supply Contract Quantities:

The joint venture will supply a total of 302.17 billion standard cubic metres (BSCM) of feed-gas required
for the NLNG's three trains. The feed-gas for the three trains will be a combination of associated and non-
associated gas. When NLNG's train three becomes fully operational, a total of about 41.83 million
standard cubic metres will be required by the plant daily.

Licenses and Leases.

 There are two types of licenses issued to oil producers in Nigeria namely: the Oil Prospecting License
(OPL) and the Oil Mining License (OML) with validity periods ranging from 5 to 20 years respectively.

As at February 1999, there were a total of 48 OML's and OPL's issued mainly to Joint Ventures with
government participation.
OPERATORS IN THE INDUSTRY
The Department of Petroleum Resources (DPR)
This governmental agency is charged with the responsibility of regulation and supervision of all the
operations being carried out under licenses and leases in the Oil and Gas. The operations include the
exploration, production and marketing of crude oil and refined petroleum products.

The Nigerian National Petroleum Corporation (NNPC)

The NNPC is vested with the exclusive responsibility for upstream and downstream development, which
entails exploiting, refining, and marketing Nigeria’s crude oil. The NNPC through the NAPIMS supervises
and manage government investment in the Oil and Gas Industry. Since its inception, the NNPC and its
subsidiaries have undergone strategic restructuring, which have kept it abreast of opportunities in local
and international spheres. NNPCs oil and gas operations are undertaken both in upstream and
downstream operations.

All NNPC upstream operations i.e. crude oil production, are currently managed under the Exploration and
Production Directorate which consists of the following Strategic Business Units (SBUs) that operate
directly under the NNPC:
a. National Petroleum Investment Management Services( NAPIMS)
b. Crude Oil Sales Division ( COSD )
c. Integrated Data Services Limited ( IDLS )
d. Nigerian Petroleum Development Company ( NPDC )
e. Nigerian Gas Company (NGC)
These SBUs are collectively responsible for surveys, seismic data collation and interpretation, crude oil
exploration, production, transportation, storage and marketing.

The downstream operations cover crude oil/gas conversion into refined and petrochemical products and
finer chemicals, and gas treatment as well as transportation and marketing of the petroleum products.
The Downstream plants under the NNPC include the four refineries with a total installed capacity of
445,000 barrels per day; two in Port Harcourt (210 000b/d), one each in Warri and Kaduna (125,000b/d
and 110,000b/d respectively) refineries. Also, three petrochemical plants in Warri and Kaduna are part of
downstream operations.
Nigeria has 5000 kilometres of pipeline network, twenty-one (21) storage depots and nine (9) LPG
depots.
What is a community relation and how is done?
Basically, Community Relations is the process of building and sustaining a good relationship between
NNPC and its host communities in order to provide a conducive environment for its operations.

Regular meetings are held with the communities to identify their needs and decide how best to assist
them in actualizing their aspirations.

4 What is sustainable community development?

Any community relation strategy that is adopted must be sustainable enough to meet the requirements of
the present generation without compromising the rights of future generations to available resources.

Programmes and infrastructure must be such that they are self sustaining over time and adopt a holistic
approach that recognizes the need to sustain the environment and the involvement of communities in the
decision making process.

It seeks to provide a framework that gives impetus to the communities to drive and take ownership of the
development process.

5 What is CSR and how does it work?

It means corporate social responsibility. CSR is just another name for good corporate citizenship, where a
corporate organization endeavors to identify and meet the social needs of communities in its area of
operation. This may be in the form of community assistance, infrastructure development or human
capacity building.

6 How are the projects for any particular community selected?

Basically, all NNPC strategic business units (SBUs) or or subsidiary companies are required to set up a
Joint Community Relations Committee (JCRC) with their host communities. It is the responsibility of this
committee to deliberate and select viable and sustainable projects for their communities subject to
available funds.

Usually a basket of possible projects is developed and prioritized. Selection is often based on the order of
priority for the identified projects.

7 Is there any legislation that compels oil and gas companies to provide assistance for their host
communities?

There is currently no legislative backing for community based programmes and projects embarked upon
by oil and gas companies in Nigeria. It is purely at the discretion of the operating companies. However the
proposed oil and gas industry reforms will address some of these issues in the Petroleum Industry Bill
(PIB) which is currently before the National Assembly

2 What is upstream/downstream investment?

Upstream investment is the investment in oil exploration and production while downstream investment is
the investment in every other sector of the oil industry that has to do with LNG, refining, marketing,
distribution etc

8 What is the relationship between National Petroleum Investment and Management Services
Division – NAPIMS and the Commercial and Investment Division of NNPC?

National Petroleum Investment and Management Services (NAPIMS) is the Corporate Strategic Unit
(CSU) that manages the Federal Government’s Investment in the upstream Petroleum industry while the
Commercial Investment Division manages NNPC core investments in the service and Downstream
sector.

17 What is renewable energy?

Renewable is energy from a source which can be managed, so that it is not subject to depletion in a
human time scale.

18 What is E10? How is it different from PMS?

E10 is a blend of 10% by volume Ethanol and 90% by volume Gasoline. E10 gasoline (also referred to as
Gasohol) differs from PMS in that it contains oxygen which results in more complete fuel combustion
thereby reducing harmfulemissions.

19 What is the acceptability level of E10 as a form of fuel from the consumer and Environment
stand points?

E10 is an environmentally friendly form of fuel that has been very well accepted in other countries, e.g.
Brazil, India, Thailand, USA, Germany etc. The key to successfully market E10 is to prevent water
contamination. These procedures will be applied all along the value chain from the export terminal to the
import terminal to the depot and service stations storage tanks. Trucks and pipelines will also be subject
to new procedures. Here, proven quality assurance procedures developed by Petrobras will come in
handy.

20 How will PPMC role be affected by the introduction of E10 to the Nigerian market?

Nothing really changes at least in the early stages except that with the introduction of E10, PPMC now
has a new supplier it needs to interact with, i.e., the import traders. Refineries will continue to supply
PPMC based on same processes as before however, there may be the need to adapt refinery facilities to
handle ethanol especially when the programe is expanded. In terms of how supply and demand
management processes are concerned, there will be no change.

21 What is the colour of E10?

The colour of E10 is green connoting environmental friendliness.

22 What is Green House Gases (GHG)?

GHGs are gases such as carbon mono-oxide and carbon dioxide whose presence in the atmosphere
results in the earth’s surface being warmer than it would otherwise be (Global warming).

23 Why make Ethanol from biomass?

The essence of making ethanol from biomass is to integrate the Agricultural sector with the Petroleum
sector of the economy. This would enable Nigerians reap the benefits of job creation.

24 What is the yield of ethanol from Biomass?

One (1) ton of sugarcane yields approximately 95 liters of Ethanol while one (1) ton of cassava can yield
up to 150 liters but sugarcane fermentation is easier than cassava.

3 What is PPMC?

The Acronym: PPMC means Pipelines and Products Marketing Company Limited. It was incorporated in
Nov. 1988 as a wholly owned subsidiary of NNPC. It commenced operation in Jan. 1989

9 What is the relationship between PPMC and NNPC?

PPMC is a subsidiary of NNPC. NNPC is a Federal Government Corporation created by the merger of
Nigeria National Oil Company (NNOC and Ministry of Petroleum Resources through decree 33 of 1977.

25 What are the major functions of PPMC?

PPMC supplies Crude Oil to Refineries for refining and evacuates Petroleum Products from the Refineries
for distribution to the domestic markets. It also ensures that daily National demand for Petroleum
Products are met by augmenting local supplies from Refineries with import. In addition, PPMC markets
other special products such as HPFO, LPFO, Bitumen etc.

27 How can one be a Marketer of PPMC’s products?

Marketers are first licenced by DPR, armed with the licence, bulk purchase agreement is entered into with
PPMC.

26 How can one get allocation for Petroleum Products like, LPFO, HPFO, Bitumen etc?

LPFO is Low Pour Fuel Oil mainly used in Industries as fuel for generation of power or for firing their
heaters. Allocation is made to industries through Marketers. HPFO is mainly exported while Bitumen is
allocated to construction Companies as well as the FMWH, SMWH etc.

28 How can one set up a filling Station and begin to get Products from PPMC?

The first port of call will be the DPR which will license the prospective marketer and then sign bulk
purchase agreement with PPMC.

29 What is the national demand for Petrol, Kerosene, AGO, LPG and Aviation Kero.

Petrol or PMS is about 30 million litres per day,

AGO = 12 million litres per day
DPK = 8 million litres per day
ATK = 2 million litres per day
LPG = 192,000 Kg per day 15,360 cylinders of 12.5kg capacity
30 How many depots does NNPC have and why are some of these depots not functioning?

We have 22 depots across the Country some are not functioning due to lack of products occasioned by
pipeline vandalism and other supply challenges.

31 Why is Nigeria always experiencing fuel scarcity and what could be done to find a lasting
solution?

Inadequate supply of products due to frequent breakdown of the local refineries, incessant pipeline
vandalism and bureaucratic delays in discharging imported products, strike actions by labour unions,
product hoarding and diversion by unscrupulous marketers, Government’s policy on subsidy.
Dependence on imported products and changes in market fundamentals of Crude Oil and Refined
products in the International Markets.

32 What is PPMC doing about the incessant pipeline ruptures and vandalism with its attendant
implications on life, property and environment?

Integrity survey of the pipelines are being carried out to determine those needed to be changed due to
age. Government is also currently considering coming up with a master plan on pipelines protection.
Ensuring that PROW is clearly delineated. Also, Nigerians need education and enlightenment to
appreciate the importance for the protection of the pipelines and other public facilities.

33 Safety is paramount in the Oil and Gas Industry, what obtains in Pipelines and Products
Marketing Company Limited?

PPMC has a full fledged department with responsibility for enforcement of HSE Industry Regulations with
Slogan “SAFETY FIRST” supported by an annual safety week awareness campaign.

34 The constant increase in the price of crude Oil in the International Market is making some
major users of the Product (Japan and the likes) to source for an alternative source of energy,
what is your position on this?

PPMC will always be relevant in the transport energy sector since it is already keying into the biofuel
development.

35 Some Investors are apprehensive about the Niger Delta crises, what do you think government
can do to curb the crises?

Government is already addressing the issues with emphasis on the development of the region through a
comprehensive Niger Delta Master Plan. Besides, Government recently established a Ministry of Niger
Delta to coordinate development of the oil producing region. This is in addition to the Niger Delta
Development Commission (NNDC) which has been in existence close to a decade and currently making
appreciable impact in the lives of the people of the Niger Delta. Above all, Government also recently
granted amnesty to the militants in the region, a unique move that may enhance peace in the region.

36 Corporate Social Responsibility (CSR) has become a vehicle to attract goodwill and attention to
an organization, are you doing anything in this regards?

PPMC is a responsible Corporate Organization which has identified with its Host Communities through
community assistance & sustainable development projects. It also carries out special programmes aimed
at endearing her to her host Communities.

37 What measures should be taken in the Nigerian Oil and Gas industry to ensure that capacity
building in engineering and fabrication is increased in the Oil and Gas Industry?

Strict compliance with the Local content initiative of the Federal Government, Deployment of the state of
the art I.T infrastructure and Human Resources Development.

38What are the major challenges of PPMC?

1. Pipeline vandalism
 2. Subsidy on imported products – loss in revenue
3. Cash crunch
4. Obsolete/old equipment
5. Continued encroachment on pipeline right of way
6. Lack of prerequisite number of personnel
7. Unscheduled shutdown of the refineries which results in disruption of products supply.
8. Difficulty in establishing Letters of Credit for Offshore purchase of critical spare parts.
9. Frequent invitation by members of the National Assembly
10. Favour seekers from powerful and influential Publics.
39 It is widely alleged that PPMC staff connive and aid pipeline vandals in their nefarious act of
vandalism.
Pipeline Vandalism is a criminal offence for which nobody is immuned against. Available records have
shown that over 5000 (five thousand) arrests have been made across the Country and to date, No, PPMC
staff have either been arrested or implicated. The allegation is therefore unfounded.

40 It is also believed that PPMC Management especially those in Marine or Supply and
Distribution aid and abet demurrage on coastal Vessels that supply products to the Country.

Demurrage are paid directly to ship owners whom neither staff nor Management have access to. Nigeria
also charges the lowest demurrage as its demurrage calculations are based on (AFRA) Average Freight
Rate Assessment London tanker brokers’ panel as against the Spot rate charge (Platts). The difference
between the two is about 10,000 USD. Ship owners are usually reluctant to come to Nigeria, because of
this price differential. Again a number of agencies have roles to play before a vessel is discharged such
agencies include NPA, Customs, DPR and Navy.

41 Product allocation is widely believed to be a source of quick and easy money in PPMC. How
can one get this product allocation?

There are different types of products. The white products i.e PMS - Petrol, HHK – House Hold Kerosene,
ATK - Aviation Turbine Kerosene, AGO – Diesel. These are allocated to Major and Independent
Marketers. They sell these products in their various outlets.

However, in the past these Marketers use powerful and influential members of the public to obtain
allocation for products they do not actually require, and turn around to sell the products to those who
actually need it. There are other products mainly for Industrial users who have operational facilities.
These products such as LPFO, SRG, Bitumen & LPG are allocated to users directly. However, some of
these industrial users prefer to sell the allocation instead of using the product in their factory. Machinery
has been put in place to identify specific industries engaged in this bad practice for appropriate sanction.
HPFO is mainly for export.

42 How many Pump Stations does PPMC have in Nigeria?

PPMC has 15 Pump Stations out of which

8 are standing alone Pump Stations
3 are tied to the Refineries and
4 are tied to the Depots

43 Does PPMC transport different products through different pipelines?

PPMC transport all refined products through the same pipelines except Mosimi – Satellite product line
where you have different pipelines for different products. A different pipeline is used for transporting
Crude.

44 Does PPMC own and operate Product Shipping Vessels?

PPMC only chatter Vessels to Ship products. It also owns some Vessels.

45 How does PPMC secure her pipelines?

PPMC secure her pipelines through the use of Community guards, Nigeria Mobile Police Force, Nigeria
Military, National Security and Civil Defence Corp also assist.

46 How does PPMC distribute products to the riverrine areas?

PPMC distributes products to the riverrine areas through floating Mega Stations and some filling stations
with authorized licence to sell petroleum products in the Area.

47 Does PPMC market LPG?

Yes, PPMC markets LPG (Liquefied Petroleum Gas)

48 Does PPMC also export petroleum products?

Yes, PPMC exports, HPFO and sometimes other products when they are surplus.

49 Does PPMC market Crude Oil?

No. PPMC does not market Crude oil.

50 Apart form the use of pipelines, how does PPMC transport her products?

PPMC transports products using road tankers and coastal vessels.

51 How can one buy Kerosene from PPMC?

One can buy Kerosene from PPMC only if one has authorized storage facility and is a registered marketer
with PPMC.

52 Why does PPMC grant credit facility to some marketers?

PPMC grants credit facility to some marketers it adjudged to be credit worthy in terms of their capacity.

53 What are the efforts put in place to reduce high demurrage in relation to importation of
Petroleum Products?

Provision of N3.00 by Petroleum Product Pricing Regulatory Agency (PPPRA) to pay for Private Depots
facilities in the interim.This is to enable big vessels discharge on time and depart.

54 How do we determine the Government subsidy?

The total landing cost ex-filling station minus fixed pump price by PPPRA plats.

55 What is PPMC doing to encourage people to use liquefied Petroleum gas (LPG) and what is the
PPMC price?

PPMC is carrying out a campaign to encourage members of the public through participation in Trade fairs
and exhibitions. PPMC price is N55.56 per litre.

56 What is the volume of LPG in 12.5kg cylinder?

21.875 litres.

10 What is PHRC installed capacity?

PHRC, 210,000bp/d

11 What are the products of PHRC?

PMS, Ago, DPK, fuel Oil and LPG.

57 What are the factors that hamper PHRC smooth operation?

Mainly, aged parts, infrequent TAM and activities of the militants.

12 What is the production capacity of WRPC?

125,000bp/d

13 What is the acronym NETCO?

National Engineering and Technical Company Limited, it is a subsidiary of NNPC

14 What gave birth to NETCO and in what year was it established?

The drive for Federal Government to own and have an indigenous engineering capability to design and
build plants and facilities for the nation’s oil and gas and other allied industries. Also, it is the premier
indigenous engineering company with strategic vision of providing basic and detailed Engineering.
NETCO was established in 1989.

58 What are the contributions NETCO renders to NNPC and Nigeria?

1. Rendering services in the oil and gas industry;

2. Feasibility studies, conceptual design, basic and detailed engineering design.
3. Procurement, construction, supervision and project management.
4. Quality assurance, quality control and environmental consulting.
5. Facilitation of local content.
59 When did NETCO commence commercial operation?
August 1990.

60 Who are NETCO major clients/customers?

ExxonMobil, Chevron, Shell, AMEC, KBR, Nigeria Agip Company, Saipem, Addax, TSKJ Consortium,
TechnipCoflexip, NLNG, Ecergy among others are the main clientele of NETCO.

15 What is the meaning of NGC?

Nigerian Gas Company Limited. It was established in 1984. with a vision to be the preferred Gas
Company to its present and future customers.

16 Natural gas! Where do you get it from?

Natural gas is derived from crude oil wells and natural gas wells underground the bowels of the earth in
the reservoir.

61 Do you get gas from the earth structure like crude oil?

Yes. We have natural gas in two forms. One is associated and the other is non-associated gas.

62 What is the difference between the two types of gas?

Associated gas comes from crude oil wells along with other hydrocarbon and impurities like mud, water,
sand, etc. While non-associated gas comes from dry gas well with little or no impurities.

63 Do you produce gas or how do you get it?

No, we do not produce gas, we buy gas from gas producers.

64 Who are the producers?

The producers are the major international oil companies, e.g. SPDC (Shell), CNL (Chevron), etc, which
are involved in major oil prospecting and oil production in Nigeria.

65 Which of this gas does NGC market: Propane, Brutane or Acetylene?

Methane.

66 How do you transport your gas to the users?

Gas is transported through the pipelines.

67 What are the advantages of natural gas over liquid fuel?

Natural gas is safe, clean, cheap, and environmental friendly.