NNPC presses on for $10pb production benchmark in pursuit of cost efficiency

By Onome Amuge

• Confident oil to be in energy mix till 2050

The Nigerian National Petroleum Corporation (NNPC) is continuing its push to see that the cost of producing crude oil in Nigeria is reduced and it says its target is for a unit production cost of oil at $10 per barrel.

NNPC’s aim in the set target is to ensure sustained competitiveness in the industry so as to deliver value to Nigerians, especially shareholders, Mele Kyari, the corporation’s group managing director, is quoted as saying during the 20th Nigeria Oil and Gas Conference (NOG) themed, ‘Fortifying the Nigerian Oil & Gas Industry for Economic Stability & Growth,’ in a statement issued by Kennie Obateru, group general manager, Group Public Affairs Division.

Kyari projected that the global demand in the oil and gas industry will remain subdued substantially till the end of 2020. He however noted that despite all the forecasts pointing towards a decline in utilisation, oil will continue to play a significant role in the energy mix till 2050.

He confirmed that many countries have made significant business decisions in the use of fossil fuel, including the United Kingdom, which has denoted that no car will run on fossil fuel in the next 10 years. This, he stated, portends a huge change in the way fuel is being consumed and as the world tilts towards this move, many countries may follow suit.

Kyari further noted that this development will lead to a decrease in the demand for oil, especially in terms of its significance and the volumes of contribution. He however assured that it won’t result in the disappearance of oil nor render the ‘black gold’ worthless as oil will continue to play a relevant role in the coming years.

The NNPC boss asserted that the ensuing global oil challenge will have an impact on NNPC’s production in 2021 which means that the corporation must become more cost-efficient and resilient in its operations to maintain its value returns to shareholders.

He explained that the NNPC was already working hard to deepen domestic gas utilisation by emplacing the right fiscal environment and the right infrastructure in order to generate more employment and broaden Nigeria’s economy.

According to the NNPC helmsman, the Petroleum Industry Bill (PIB) was the key enabler that would ensure the corporation’s fiscal environment becomes more competitive and transparent, where investors can project into the next 30 years.

Also in attendance at the virtual event were prominent oil industry personalities which included, Timipre Sylva, the minister of state for petroleum resources; Mohammed Barkindo, the secretary general of the Organisation of Petroleum Exporting Countries (OPEC);  Sarki Auwalu, the director of the Department of Petroleum Resources (DPR); Tony Attah, managing director, Nigeria LNG,  and Simbi Wabote, executive secretary ,Nigerian Content Development and Monitoring Board (NCDMB).

Timipre Sylva, in a remark to the virtual gathering, assessed the state of the sector and stressed that urgent steps must be taken to ensure its survival.

He stated that the Ministry of Petroleum Resources is planning towards shifting from crude oil to gas through the National Gas Expansion Programme (NGEP), which, according to him, will boost the use of natural gas in the short and medium terms.

Sylva also said the federal government has initiated actions towards improving gas accessibility and availability, and promote gas-based industrialisation as well as economic diversification to make the NGEP highly sustainable.

On his part, Mohammed Barkindo, secretary general of OPEC, noted that the oil and gas industry in Nigeria has rebounded by over 116 per cent in the last couple of months as a result of the robust decisions taken by key stakeholders, including President Muhammadu Buhari, who he stated, played a crucial role in the OPEC Declaration of Cooperation (DoC) document.