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The NIGERIAN NATIONAL PETROLEUM CORPORATION (NNPC) was established on April 1, 1977, under the statutory instrument-Decree No.33 of same year by a merger of Nigerian National Oil Corporation, NNOC, with its operational functions and the Federal Ministry of Mines & Power with its regulatory responsibilities. This decree established NNPC, a public organization that would, on behalf of Government, adequately manage all government interests in the Nigerian Oil industry. 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.

Since its formation, NNPC has had various aims in the petroleum industry critical among is the regulation of foreign and local oil producing firms, advancing technology transfer, developing local content and indigenous participation in the industry. However, the performance of the company in terms of developing technical expertise in the exploration and production sector still lags other OPEC National Oil Companies and its partners while operational setbacks impedes the full potential of the Nigerian refineries making the oil producing nation also a fuel importing nation. This may be partially due to the government's early stand favoring maximizing oil revenues from producers and improving Nigeria's standing in the international market while delving little into the exploration and production aspect of the industry.

[edit] History and criticism

The NNPC before 1977 was called the Nigerian National Oil Corporation which was established in 1971 and started operations in 1973. The then NNOC can be described as a leading state enterprise and a molder of public sector bourgeoisie. In the early 1970s, within the NNOC emerged a technical and nationalistic oriented junior and mid level managers with degrees earned in local and foreign universities who sought more accommodation of Nigerian interests challenging the perceived influence of some foreign multinationals within the senior management level. This position later became more prominent in the oil industry towards the later part of the 1970s.

A wave of economic nationalization during the 1970s, led the NNPC, serving as a government holding company to acquire interest in some multinational oil companies oil leases. By 1973, it had acquired 35% interest in ELF (then Safrap), BP/Shell and a 33% in Agip. Later in 1975, it acquired a 55% interest in oil producing companies, this was followed by further nationalization statutes in the petroleum marketing sector and an increase to 60% of NNPC's interest in oil producing companies and the purchase of all the equity interest of BP in Nigeria.

In 1977, NNOC which was subordinate to the ministry in charge of Petroleum was merged with the ministry of Petroleum Resources to form the Nigerian National Petroleum Corporation. The authority of the new enterprise in operations and policy was enlarged including administering pricing and marketing policies in the petroleum industry, collecting revenues, and monitoring the operations of oil producing companies.

Despite NNPC's large equity holdings, state policy and operational set backs has been a problem in some of the firm's allied industries. At various points in time, the petrochemical complex built at a huge cost suffered from operational inefficiencies while a lack of state policy concerning natural gas led to the flaring of most of the associated gas by NNPC's partners.

During the Nigerian second republic, the report of the Judicial Tribunal of Inquiry into Crude Oil Sales lamented though an absence of deliberate fraud, the company showed widespread insufficient oversight in monitoring production sites, pipeline and storage facilities and ports and terminals while large quantities of oil were siphoned off by various oil industry interests without proper accounting. A rationalization exercise began after the submission of the report and a decentralized corporation was created originally with 9 subsidiary companies.

[edit] Subsidiaries

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. 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)
  • Eleme Petrochemicals Co. Limited (EPCL)

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.

[edit] External links

Source: [1]