The Minister of State for Petroleum Resources and Group Managing Director, Nigerian National Petroleum Corporation, Dr. Ibe Kachikwu, on Monday declared that the NNPC would not go ahead with some of its planned projects until crude oil prices got to a certain threshold set by the corporation.
According to him, the corporation has also succeeded in cutting down its operational cost, a development that has led to the reduction of its monthly losses from N185bn to N12bn over four months.
The minister further stated that the NNPC had engaged oil majors in the country on the need to trim down their operational costs.
He observed that although member countries at the last meeting of the Organisation of Petroleum Exporting Countries projected that oil prices would start to rise from February next year, they decided to allow market forces to determine crude prices for a while.
Kachikwu, who spoke at a press briefing to announce the 6th Africa Petroleum Congress and Exhibition coming up in Nigeria in March 2016, stated that the continent’s oil producers must learn to cut costs because of the fall in crude prices.
The congress, he said, would be organised by the African Petroleum Producers Association, Federal Ministry of Petroleum Resources and AME Trade Limited, United Kingdom.
He said, “Cutting your cost is an efficiency issue. For instance, even in our restructuring process, there is a level you cut down on your costs. In all the elements of the Ministry of Petroleum Resources, we will be looking at the total operations to see how we can deliver the same or better services at the least possible price.
“For the majors, we are engaging with them and we are being very astute in terms of assets management to trim down cost. We are becoming a bit more preferential in terms of cost-driving investments that we make. Not all projects that are on the table will see the light of day if the unit price of oil for carrying out such projects does not come to a certain threshold.
“We are doing a lot of work and we are getting results in cost-cutting and we are going to continue. But different from just the majors cutting costs, our own operational network and how we manage the oil industry has got to change. We’ve seen that over the last four months, if you look at the three reports we’ve published for the NNPC’s operations, you’ll find that starting from a deficit loss position of about N185bn a month, we were down to N12bn in the last report.”
In the spirit of cutting costs, Kachikwu said the corporation and its subsidiaries would adopt an integrated security model and would increase the speed of the delivery of tasks.