The Nigerian National Petroleum Corporation (NNPC) has signed a memorandum of understanding (MoU) with Russia’s Lukoil, which happens to be one of Russia’s largest energy companies.
A press statement released by Lukoil said Mele Kyari and Lukoil’s Vagit Alekperov both signed the agreement which will see both companies potentially working together in the areas of crude oil exploration, refining, and trading.
The MoU is one of the outcomes of the ongoing 2-day Russia-Africa Summit which Nigeria’s President Muhammadu Buhari is participating in, alongside other top delegates such as Mele Kyari, NNPC’s Group Managing Director.
“According to the Memorandum, the parties intend to consider possible cooperation in the exploration, production, and refining of hydrocarbons in Nigeria as well as upscaling existing trading relationships.
“The document also provides for possible design and technical cooperation between the companies and the provision of LUKOIL’s know-how in the implementation of production and refining projects.”
At the moment, the actual nature and terms of this agreement are not known to the public. Notwithstanding, the NNPC’s GMD confirmed the development when he retweeted a Twitter post stating that he and his team met with some Russian energy companies to seek for ways to rehabilitate Nigeria’s inefficient refineries.
The Team engaged Russian state owned company & private entities to secure development cooperation of mutual benefit. Refinery rehabilitation & gas infrastructure development on the front burner. #RussiaAfricaEconomicSummit #PMBinRussia @NGRPresident @BashirAhmaad @toluogunlesi
— NNPC Group (@NNPCgroup) October 23, 2019
Why this matters: Although Nigeria is one of Africa’s leading crude oil producers, the country’s energy sector remains one of the most underdeveloped on the African continent. Refineries are inefficient and underperforming, thereby leading to over-dependence on importation of refined petroleum products to meet local demand.
This has been a long-standing problem, with lots of failed efforts to remedy it. It is, therefore, expected that the agreement with Lukoil will help to profer solution.
Lukoil was incorporated in 1991 and over the last 25 years, it has been one of the world’s leading energy companies. The company extracts and refines crude into petroleum products and petrochemicals.