EVALUATION OF NNPC'S CORPORATE STRATEGY

Nigeria’s state oil firm, the Nigerian National Petroleum Corporation (NNPC) has
developed a three-phased corporate strategy with which it plans to leverage oil and
gas market opportunities especially within the African continent between 2017 and
2021. In the 2018 edition of the quarterly in-house publication of the NNPC under
the cover story From Gas to Greatness, the corporation’s Group General Manager,
Corporate Planning and Strategy, Mr. Bala Wunti, said that by 2021, it expected the
strategy to have come into full cycle. Wunti also disclosed that at which time it would
have expanded its business footprints beyond the shores of Nigeria first as a net
exporter of refined petroleum products, and then a hub for other hydrocarbon
businesses. Mr. Bala Wunti also said by this time, NNPC would have ramped up its
domestic refining capacity to about 650, 000 barrels per day (bd) up by about
205,000bd. The NNPC Chief Corporate Strategist said in the publication that the
corporation adopted a survival phase which would last until 2018; a consolidation
phase – expected to kick in 2019; and then a long-term phase – taking off and
becoming full-fledged by 2021, as the three- phased corporate strategy it was
pursuing. “While our strategy department is in charge of strategy development and
business model formulation, our Corporate Planning Department (CPD) is in charge
of our planning and budgeting process. Key performance indicators are established
to monitor performance and ensure our business plans achieve the desired strategic
objectives,” said Wunti in the magazine which focused on gas in the edition.
According to him, the corporate strategy for the NNPC was in three phases of short-
term survival phase; midterm consolidation phase and long-term growth phase
respectively. He said the survival phase was in 2018 where the corporation’s primary
focus was to ensure the corporation stayed afloat by keeping its cost well under
control below its revenues. “Under this stage we have to seek to resolve protracted
legal and commercial stalemates hindering us from taking major investment
decisions that have long term growth implications. This includes, resolving
Production Sharing Contracts (PSC) arbitrations; Escravos Gas-to-Liquids (EGTL)
project disputes as well as taking Final Investment Decisions (FIDs) on critical
upstream projects,” he stated The second phase, Wunti added: “involves midterm
consolidation phase where the corporation would be seeking to achieve major
milestones most of which align with national aspirations as enshrined in the
Economic Recovery and Growth Plan (ERGP).” This step, he explained included
achieving three million barrels per day (mbd) average oil production, 45 billion
reserves, Incorporated Joint Venture (IJV) implementation, Seven Critical Gas
Development Plan (7CGDP), five billion cubic feet per day (bcfd) of gas to domestic
market and growing NNPC refining capacity to about 650, 000 barrels per day (bd).
“In the long term, post, 2021, we see NNPC achieving long term growth by
expanding its footprints beyond the shores of the country, becoming a net exporter
of products and dominating the West African region,” the corporation’s chief
strategist noted.

Alignment with Company Mission

The above strategy is basically in line with NNPC mission statement as stated on their
website “NNPC is an integrated Oil and Gas Company, engaged in adding value to
the nation’s hydrocarbon resources for the benefit of all Nigerians and other
stakeholders.” By increasing the gas production to make five billion feet per day of
gas to domestic market adds tremendous value to the energy resource which was
previously flared, according to sweet crude report on 4th of April, 2019 Nigeria
flares about 1 billion standard cubic feet of gas costing the NNPC a loss of N234bn
due to gas flaring in 2018 alone.

Characteristics of The Strategy

Flexibility: “Primary focus was to ensure the corporation stayed afloat by keeping its
cost well under control below its revenues.” This strategy is quite flexible and largely
dependent on the external global crude oil price.

Measurable: “five billion cubic feet per day (bcfd) of gas to domestic market and
growing NNPC refining capacity to about 650, 000 barrels per day (bd).” The majority
of the achievable milestones are quite measurable and can be concretely stated
when it has been achieved.

Motivating: Although the strategy ought to motivate the employees this is most
unlikely due to the fact that it is a state-owned corporation and staffs are not really
motivated.

Suitable: this is considered suitable because objectives are in line with the broad aims of
the corporation, which are clearly expressed in the mission statement.
In conclusion the strategy is comprehensible and could be easily understood by employee
and stakeholders. Alongside the strategy involves a few of the 15 Grand strategy, namely
joint ventures and Strategic alliances.
Reference

NNPC group website. (28th June, 2019). The NNPC mission and vision statement.
Retrieved from http://www.nnpcgroup.com/about-NNPC/pages/mission-and-
vision.aspx

NNPC strategizes towards long-term survival (2018, May 28), Leadership Newspaper.
Retrieved from https://leadership.ng/2018/05/28/nnpc-strategises-towards-long-
term-survival/

Pearce, J.A. and Robinson, R.B. (2011) Strategic Management: Formulation,

Implementation and Control. McGraw Hill, New York.