NNPC allies NUPENG, PENGASSAN, IPPG, others to achieve $10pb production cost
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.
A statement by the Group General Manager, Group Public Affairs Division, Dr. Kennie Obateru, stated that the Group Managing Director of NNPC, Mallam Mele Kyari, made the call Tuesday at the launch of the Nigerian Upstream Cost Optimization Programme (NUCOP) which held at the NNPC Towers.
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 optimization imperative.
He called on industry players to adopt such measures as transparency, collaboration, efficiency and shared services to help in driving down costs in order to meet the target.
Mallam 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 sub $10 per barrel level.
“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 GMD posited.
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 (PSC) production was below $20 per barrel, stressing that there was a need for cost optimization in order to keep the Oil and Gas Industry afloat in Nigeria.
“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 optimization objectives,” the Minister stated.
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), Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) who spoke at the event described the initiative as a welcome development and pledged their support for NUCOP.
At the #NUCOPLaunch yesterday, GMD @MKKyari emphasised #NNPC's commitment towards optimising the cost of production: 1) in compliance with Presidential directive to the @FMPRng & 2) in alignment with current realities of energy transition, consumer and investor choices. pic.twitter.com/U7s9HhbINj
— NNPC Group (@NNPCgroup) February 10, 2021