The Nigerian National Petroleum Corporation (NNPC) has called on stakeholders in the oil and gas industry to support in reducing operations costs to achieve the $10 or less per barrel production cost target.
This was disclosed by the Group General Manager, Group Public Affairs Division, NNPC, Dr. Kennie Obaterui in a statement seen by Nairametrics when shared via the corporation’s Twitter handle on Wednesday.
Obateru stated that the Group Managing Director of NNPC, Mallam Mele Kyari, made the call, Tuesday at the launch of the Nigerian Upstream Cost Optimisation Programme (NUCOP), which was held in Abuja.
He explained that the current reality dictated by the global energy transition and demand erosion occasioned by the Covid-19 pandemic has made cost optimization imperative.
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He said, “It is in our informed interest to optimize 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.”
The NNPC boss tasked operators to adopt measures like transparency, collaboration, efficiency and shared services to help in driving down costs in order to meet the target.
Mallam Kyari added 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 sub $10 per barrel level.
Meanwhile, the Minister of State for Petroleum Resources, Chief Timipre Sylva, said, “Engagement with industry stakeholders, under the NUCOP, is part of the resolve of this administration to confront this challenge of high production cost. I expect robust discussions and a realistic roadmap to achieve the cost optimization objectives.”
The average cost for Joint Venture production was below $30 per barrel while that of Production Sharing Contract (PSC) production was below $20 per barrel.
There was a need for cost optimization in order to keep the Oil and Gas Industry afloat in Nigeria.
What you should know: NUCOP is an industry-wide initiative designed to optimize Nigeria’s upstream operating expenses through process enhancement and industry collaboration to ensure improved and sustainable profitability for all stakeholders.