…….To crash crude production cost, boost competitiveness
Efforts to achieve the $10/barrel crude production target deepened on Tuesday as the Federal Government officially launched the Nigerian Upstream Cost Optimisation Programme (NUCOP).
In his remarks, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, said Nigeria must pull down production cost, describing it as a self interest pursuit.
‘There’s a global energy transition. Less cost-efficient companies cannot survive today. $50/barrel production cost cannot survive. There are issues around synergy that we’ve not achieved. “There are issues of security. Many companies are hiring their own armies and we can’t continue like that. Issues of taxes and others have to be addressed. Our practices must change so that service providers can deliver.
‘So, we can achieve economic growth and our partners can derive benefits. It’s not CSR but pure business. We must have the best of fiscal environment and policies so that cost of operation can come down and our target is at least $10/barrel.
‘If we do these, tax benefits will increase and profit margin will increase. This is a task that must be done. This partnership will help the country. Crude has hit the $60 and it comes with a product price increase. We are trying to keep the country wet. We are engaging with labour. No provision for subsidy in the budget,’ the NNPC boss explained.
Speaking at the launch, the Minister of State, Petroleum Resources, Chief Timipre Sylva, said that the aim of the new initiative was to boost industry collaboration and process enhancement.
According to him, of all the Nine priority areas given to the Ministry as its operational mandate, reduction of crude oil extraction cost remains pivotal.
He said that the ministry has since identified some initiatives to tackle the challenges stacking against lower production cost, adding that the cost in Nigeria was exceptionally high compared to other oil-producing nations like Iran and Saudi Arabia.
Sylva added that high cost would rob the country its desire to attract investments and remain globally competitive.
He added that capital expenditure, operational cost, policy-related elements, weak collaboration, capacity and capability issues, facility reliability, single sourcing syndrome, high magnitude of crude loss, multiplicity of tariff, among others, are issues that need to be urgently tackled.
‘Members of the NUCOP are officials of the Petroleum Ministry, DPR, NCDMB, PETAN, NNPC, among others,’ he said.
