Gas Supply Agreement: Mele Kyari, The Game Changer

By Adewole Kehinde

“The pessimist sees difficulty in every opportunity. The optimist sees opportunity in every difficulty.” Winston Churchill

Nigerians would recall that on September 5, 2023, President Bola Tinubu arrived in New Delhi, the capital of India, for a six-day official visit, during which he will attend the G-20 Leaders’ Summit among other engagements.

The President met with Indian business representatives as part of the Nigeria-India Presidential Roundtable and Conference to mobilise international funding for infrastructure development.

The Nigeria-India Presidential Roundtable and Conference was held in New Delhi, India.

During the event, the President assured the businessmen of the best returns on investment possible, adding that there is nowhere else like Nigeria.

He also assured them that Nigeria would offer them the best returns for their investments at any time.

The most interesting aspect to me is that of Indorama Petrochemical Limited, which pledged a new investment of $8 billion in the expansion of its fertiliser production and petrochemical facility in Eleme, Rivers State.

On Saturday, September 16, 2023, I was glad to see the GCEO of the Nigerian National Petroleum Company Limited (NNPC) signing a gas supply agreement with Indorama Energy PTE Limited, valued at about $7 billion in the short term.

Speaking at the event, the Group Chief Executive Officer of the national oil company, Mr. Mele Kyari, noted that the project will have a lifetime value of $18 billion and is expected to add $3 billion to the country’s Gross Domestic Product (GDP).

The deal would also see the Nigerian National Petroleum Company Limited supply Indorama with about 800 million standard cubic feet (SCF) of gas.

Mele Kyari underscored the seriousness of the agreement and NNPC Limited’s intention to deliver it—not just its intention but its determination to deliver this project.

In his words, Kyari said, “No doubt our laws are very clear. The Petroleum Industry Act (PIA) specified that the NNPC must do everything possible to ensure that we harness the abundant gas resources in our country. So, it’s a lawful requirement for the NNPC. But more than anything, we are a gas country with associated oil.

“But we have always focused on oil, and today, it is the moment of gas all over the world, not just because the world needs it, but it is also agreed that it is a transition fuel that everyone needs and everyone can rely on.”

According to him, the directive of the president also aligned with the company’s plan to ensure that it delivers on gasification projects nationwide and makes it available for businesses and individuals on demand.

Kyari stated that when gas is made available, industries will spring up, the power supply will be boosted, and employment will be created, thereby leading to an economic boom. 

“So, it’s clear there’s a huge connection between harnessing gas resources and this event. And therefore, when the president said we should find gas for Indorama, we had no difficulty coming up with a solution. And the solution is very simple. 

“We have resources, and we will make available the additional gas that is required. We will partner with Indorama so that we can own the upstream assets and also produce the gas.

“We will go down the chain and create the midstream facilities for these industries. For urea, increased fertiliser production, and, of course, the creation of a condensate refinery,” he added.

Kyari pointed out that the project will open more vistas for further agreements with other entities in its plan to deploy gas for Nigeria’s industries.

“They’re very practical, and we’re happy at the commitment of Indorama that they are out to invest at least $7 billion on this project in the short term. And perhaps this will open more gateways for us to do more business with others.

I saw the joy in Mele Kyari when he said that, “Therefore, this country is on the threshold of making value out of gas beyond any imagination. NNPC is currently pursuing many other large-scale gas projects that we could not take forward, but we’re now more than ever before determined to ensure that this also progresses. Indorama, if you need more gas, talk to us.

“Ultimately, even on this project alone, we see an annual GDP contribution of over $3 billion and perhaps lifetime government revenues of up to $18 billion, even for this project.

“So, this is a huge project, and we in NNPC are committed to it.”My team and I will do everything possible to deliver it. There are no obstacles. There are no fences. We will work together to deliver on this, and in the end, our country will prosper, and not just that, our companies will make money,” Kyari noted.

Another good news is that the leadership of the team is in the hands of Mr. Bala Wunti, the Chief Upstream Investment Officer of the NNPC Upstream Investment Management Services.

Bala Wunti is a thoroughbred oil and gas industry professional with 30 years’ experience covering technical, commercial, managerial, and executive roles across the oil and gas value chain. He is a graduate of chemistry from Ahmadu Bello University and has a Master’s degree in business administration.

Wunti has also assured that he will bring the project to fruition, as the programme would help support Indorama‘s expansion plan.

Noting that the deal will be mutually beneficial, he explained that it will assure gas delivery to meet the gas-based industry’s demand.

The scope of the project, he said, involves the delivery of gas, which will require the NNPC to drill and carry out development activities as well as place a robust gas delivery infrastructure through the pipelines.

“Most importantly, it will also incorporate a liquid management solution in the form of a condensate refinery. Overall, the anticipation is that at the peak of the project, about 800 million scf of gas will be made available for domestic use, part of which will be used to provide the needed quantity of gas by Indorama.

“And the balance will be supplied to the domestic market to meet power demand and commercial and other activities, particularly in eastern Nigeria.

“Following the evaluation, it was very clear that there’s significant alignment between our companies, and that alignment helped us come together to agree that we need to develop it further,” he explained.

The Managing Director/Chief Executive of Indorama Eleme Petrochemicals, Manish Mundra, added his voice by highlighting the almost 17-year-old partnerships that had existed between both parties, explaining that the new deal will further boost the existing business relationship.

“On one hand, it is a strategic collaboration to unblock the upstream. But what’s more important is that we will partner downstream to share the value chain, and that’s more important because that’s where the business lies.

“Globally, Nigeria’s gas reserves and Nigeria’s strategic location should position Nigeria as one of the largest producers of urea. We’re the largest producer of ammonia, the largest producer of methanol, and the largest producer of petrochemical polymers.

“This is what the available resources should have done, and we have started this journey. What we are going to do while we are working together on gas resources is also partner downstream and invest in at least two more lines of fertiliser, two lines of methanol, and one big petrochemical project besides the condensate refinery and other pipeline infrastructure.

“This will already make Nigeria one of the largest producers of urea in Africa and the Western Hemisphere. NNPC can create almost 10 to 30 such partnerships,” he added.

The $7 billion Indorama deal with Nigeria is certainly an important development for both parties involved. Indorama Group, a global leader in petrochemicals, has made substantial investments in Nigeria’s fertiliser and petrochemical sectors in recent years. This particular deal refers to Indorama’s plans to build a new industrial complex in Nigeria, which will include a methanol plant, a fertiliser factory, and a gas processing facility.

This investment is significant for Nigeria, as it aims to diversify its economy by developing its petrochemical industry and reducing its reliance on oil revenue. The deal is expected to create thousands of jobs, both directly and indirectly, thereby contributing to economic growth and social development in the country.

Indorama’s investment also demonstrates their confidence in Nigeria’s business climate and long-term prospects. Their commitment to sustainable practices and technology transfer will likely be beneficial for Nigeria in terms of knowledge sharing and skill development.

Overall, the $7 billion Indorama deal highlights the potential for mutually beneficial partnerships between multinational corporations and nations like Nigeria, fostering economic development and helping to address various challenges.

Adewole Kehinde is the publisher of Swift Reporters and can be reached via 08166240846, [email protected]