NNPC rallies industry stakeholders for Upstream cost optimisation

*Chief Timipre Sylva, Nigeria’s Minister of State for Petroleum Resources, at the launch of the Nigerian Upstream Cost Optimisation Programme, noted there is a need for cost optimisation to keep the oil and gas industry afloat in the country 

Alexander Davis | ConsumerConnect

The Nigerian National Petroleum Corporation (NNPC) has called on stakeholders in the oil and gas industry to join in working towards reducing operations cost to achieve the $10 or less per barrel production cost target.

Dr. Kennie Obateru, Group General Manager, Group Public Affairs Division of NNPC, in a statement Tuesday, February 9, 2021, said Malam Mele Kyari, Group Managing Director of NNPC, made the call Tuesday, February 9 at the launch of the Nigerian Upstream Cost Optimisation Programme (NUCOP) at the NNPC Towers, in Abuja, FCT.

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.

The NNPC Chief stated the current reality dictated by the global energy transition and demand erosion occasioned by the COVID-19 pandemic has made cost optimisation imperative.

Malam Kyari said: “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.”

The NNPC GMD 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.

He further 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 sub $10 per barrel level.

Earlier in his address on the occasion, Chief Timipre Sylva, Honourable Minister of State for Petroleum Resources, stated that currently, 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.

The Minister noted that there is a need for cost optimisation in order to keep the Oil and Gas Industry afloat in Nigeria.

Sylva stated: “Today’s 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 optimisation objectives.”

Senator Bassey Akpan, Chairman, Senate Committee Upstream, in his goodwill message on the occasion, the said the 9th National Assembly (NASS) would pass the Petroleum Industry Bill (PIB) to provide a conducive environment for all operators in line with global best practices.

Leaders of agencies, trade groups and labour unions in the Oil and Gas Sector, such as the Nigerian Content Development and Monitoring Board (NCDMB), Oil Production Trade Section (OPTS), Independent Petroleum Producers Group (IPPG), Petroleum Technology Association of Nigeria (PETAN), who spoke at the event described the initiative as a welcome development and pledged their support for NUCOP.

Other stakeholders Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) also welcomed the idea and pledged their support.

Kindly Share This Story