Nigerian National Petroleum Corporation (NNPC) – Functions & Problems

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NNPC

The Nigerian National Petroleum Corporation (NNPC) was established in 1977 by the NNPC Act No. 33, through the merger of the Nigerian National Oil Company (NNOC) and the then Ministry of Petroleum Resources.

Nigerian National Petroleum Corporation (NNPC) – Functions & Problems
NNPC

The main function of the NNPC was primarily operational while the duty of the Ministry was mainly regulatory. The new body NNPC started to perform both operational as well as regulatory functions.

Reorganization of NNPC

Owing to the increasing demand, the corporation was in October 1985, re-organized into six autonomous units known as sectors to encourage innovation and efficiency. And in January 1988, the corporation was re-organized into:

  • Corporate Services which includes finance, administration, public affairs, personnel, technology and legal matters.
  • Operations which includes exploration and production, gas manufacturing, petrochemical and international manufacturing.
  • National Petroleum Investments includes crude oil marketing and joint venture activities in the exploration and production sector of the oil industry.
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A high point of the re-organization was the establishment of eleven subsidiary companies under the Corporation. These are:

  • The Nigerian Petroleum Development Company Ltd.
  • The Integrated Data Services Ltd.
  • Warri Refmery and Petro-chemical Company Ltd.
  • Kaduna Refinery and Petro-ehemical Company Ltd.
  • The Pipelines and Products Marketing Company Ltd. (PPMC)
  • Hydrocarbon Services of Nigeria Ltd.
  • National Engineering and Technical Company Ltd.
  • Nigerian Gas Company Ltd.
  • Liquifled Natural Gas Company Ltd.
  • Port Harcourt Refining Company Ltd.
  • The Elese Eleme Petro-chemical Company Ltd.

An important implication of the reorganization is that the Corporation is now financially autonomous in all its Operations.

Upstream and Downstream of Petroleum Industry in Nigeria

Activities in the oil and gas industry are normally classified into two upstream and downstream. The upstream covers all those activities related to the exploration, discovery and extraction of oil and gas and their treatment; and transportation and delivery to designated export terminals or refineries

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The downstream segment comprises all other activities from delivery to the processing plant. These include refining and subsequent conversion to chemical products, transportation of the finished products and related auxiliary services.

Problems of the Nigerian National Petroleum Corporation (NNPC)

  • Cash squeeze: Many times the corporation does not have enough money to run its day-today operations.
  • Poor financial management: Financial resources available to the Corporation have often been poorly managed.
  • Poor maintenance: The corporation’s machines and equipment are poorly maintained resulting in frequent breakdowns.
  • Corruption: The rate and level of corruption in the Corporation is high. This exists at all levels of the Corporation’s activities.
  • Political interference: The Corporation suffers from too much interference by governments rendering the corporation inefficient.