The Federal Government has revealed that the current average total cost of production for crude oil is below $30 per barrel for Joint Venture (JV) agreements and below $20 per barrel for the Production Sharing Contract (PSC).
This is as the implementation of cost reduction policy in oil exploration and production activities will help the country deliver on its growth aspirations of 40 billion barrels of crude oil in reserves and daily oil production of 3 million barrels per day.
This disclosure was made by the Minister of State for Petroleum Resources, Timipre Sylva, at the launch of the Nigerian Upstream Cost Optimization Programme (NUCOP), in Abuja, on Tuesday, February 9, 2021.
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What the Minister of State for Petroleum Resources is saying
The Minister said the country needs to optimize its unit cost of production in order to sustain its way of doing business.
Sylva, in his statement, said, ‘’Currently, the average total cost per barrel is below $30/barrel for Joint Venture (JV) agreements and below $20.barrel for the Production Sharing Contract (PSC). We need to optimize our unit cost of production in order to sustain our way of doing business.
‘’Today’s engagement with industry stakeholders, under the Nigerian Upstream Cost Optimization Programme (NUCOP), is part of the resolve of this administration to confront this challenge (high production cost). I expect robust discussions and a realistic roadmap to achieve the cost optimization objectives.’’
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On his part, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, said that they are leveraging on the laudable initiative of NUCOP launch on the background of the directive of the Federal Government to the Minister of State for Petroleum Resources with the mandate that cost of crude oil production must be cut down.
What you should know
- It can be recalled that the NNPC had in June 2020, said that it was taking some measures to bring down the cost of crude oil production to $10 per barrel or below.
- The corporation said it was looking at such variables like logistics, security and transportation with a view to reducing the cost of production.
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HMSPR at #NUCOPLaunch:
"Currently,the average total cost per barrel is below $30/barrel for Joint Venture (JV) agreements & below $20/barrel for the Production Sharing Contract (PSC). We need to optimise our unit cost of production in order to sustain our way of doing business" pic.twitter.com/5QwU45CXYG
— NNPC Group (@NNPCgroup) February 9, 2021
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