Page 6 - DMEA Week 30 2022

DMEA COMMENTARY DMEA

Should Brazil copy Nigeria?

The head of Nigeria’s NNPC Ltd is touting his company’s plans to distance
itself from government policy on domestic petroleum product pricing,

while Petrobras continues to set fuel prices and incur the state’s wrath.

AFRICA FOR at least 15 years, Nigeria’s government has They pointed out that the new entity was
been holding Petrobras as an example of a truly designed to function as a corporation and not as
successful national oil company (NOC) and an arm of the government, noting that it would
WHAT: saying that it hoped to see Nigeria’s own NOC, not have regulatory authority, would not distrib-
Kyari, the CEO of NNPC Nigerian National Petroleum Corp. (NNPC), ute budget funds such as gasoline subsidies and
Ltd, says handling fuel replicate the Brazilian major’s success. would have to compete with private operators
imports for a fee will Granted, NNPC has not been able to match for new contracts. These changes, they said, will
help distance the new Petrobras’ great stroke of luck in the form of the make NNPC Ltd more transparent, more effi-
company from political massive offshore pre-salt discoveries in the San- cient and more capable of sustaining itself.
fights. tos and Campos basins. In other words, they emphasised the fact that
Nigeria does have sizeable offshore oil and gas the new company would be managed like a cor-
WHY: reserves, but not on the same scale as those that poration – rather like Petrobras, even if they did
The new policy is part have allowed Brazil to push output up more than not use that exact phrasing.
of a move to introduce 1.5mn barrels of oil equivalent per day (boepd)
corporate management since the first finds in the pre-salt zone in 2005. Fee for service
practices. NNPC is, however, taking steps to move Interestingly enough, though, one of the points
closer to Petrobras’ management model, which Kyari mentioned ahead of the launch ceremony
WHAT NEXT: officials in Abuja view as one of the key drivers actually served to highlight the fact that NNPC
Petrobras might be able of its success. would be different from other NOCs – and in
to handle a fee-for- On July 19, the Nigerian NOC’s successor – particular, different from Petrobras.
service model, since it Nigerian National Petroleum Co. Ltd (NNPC According to a report from This Day, Kyari
is shifting its focus to Ltd), formally incorporated last September in noted in a pre-recorded interview broadcast by
upstream operations, but line with the provisions of the country’s newly Nigeria’s Channels Television two days before
NNPC Ltd might be less adopted Petroleum Industry Act (PIA) – was the launch ceremony that NNPC had previously
successful. unveiled in a splashy five-hour ceremony. functioned on a non-commercial basis as the
Those present at that ceremony – including country’s only licensed importer of petroleum
Muhammadu Buhari, the president of Nigeria, products. By contrast, he said, NNPC Ltd will
and Mele Kyari, the former group managing perform the same function on a commercial
director of NNPC, now serving as group CEO basis, importing fuel on behalf of the govern-
of NNPC Ltd – stressed that the new company ment in exchange for a fee.
would be different from its predecessor. “In the case of the price of petroleum, this is

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