The Nigerian National Petroleum Corporation has urged operators in the nation’s oil and gas industry to cut the cost of production in order to survive in the face of the global energy transition.
The NNPC called on stakeholders in the industry to join in working towards reducing operations cost to achieve the $10 or less per barrel production cost target.
The Group Managing Director of NNPC, Mallam Mele Kyari, made the call on Tuesday at the launch of the Nigerian Upstream Cost Optimisation Programme in Abuja.
Speaking at the event, the NNPC boss said the current reality dictated by the global energy transition and demand erosion occasioned by the COVID-19 pandemic has made cost optimisation imperative.
“It is in our informed interest to optimise our cost of production. The realities of energy transition and investor choices are very much clear to us. There is nowhere in this world where a less cost-efficient operator can survive today,” he said.
He called on industry players to adopt such measures as transparency, collaboration, efficiency and shared services to help in driving down cost in order to meet the target.
Kyari disclosed that under the NNPC operational theme for the year, known as ‘Execution Excellence’, the corporation would achieve a contracting cycle of six months or less which would help create efficiency and drive down unit operating cost to less than $10 per barrel level.
In his address, the Minister of State for Petroleum Resources, Chief Timipre Sylva, stated that currently the average cost for Joint Venture production was below $30 per barrel while that of Production Sharing Contract production was below $20 per barrel.
He said there was a need for cost optimisation in order to keep the industry afloat in Nigeria.
According to the statement, leaders of agencies, trade groups and labour unions in the industry such as the Nigerian Content Development and Monitoring Board, the Oil Production Trade Section, the Independent Petroleum Producers Group, and the Petroleum Technology Association of Nigeria, among others, who spoke at the event, described the initiative as a welcome development and pledged their support for it.
NUCOP is an industry-wide initiative designed to optimise Nigeria’s upstream operating expenses through process enhancement and industry collaboration to ensure improved and sustainable profitability for all stakeholders.