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NNPC to IOCs: You can’t spend $30 to produce barrel of crude

The Nigerian National Petroleum Corporation (NNPC) has told oil producers in the country that the era during which they are allowed to spend $30 to produce a barrel of crude oil no longer exists.

NNPC had earlier begun aggressive action to get oil producers in the country to produce at $10 per barrel and the Group Managing Director of the Corporation, Mele Kyari, yesterday, stated that the COVID-19 hangover on Nigeria’s oil economy, which dipped oil price in the region of $30 to $40 per barrel, makes it practically unsustainable for the country to produce at $30 per barrel. “It is instructive to understand that the current market reality cannot support inefficiency and escalated costs of operations. The era of $30/bbl oil no longer exists.

“In today’s COVID- 19-defined market, sustaining operations and making progress means that all stakeholders must recognise the need to improve efficiency, reduce costs, eliminate wastages, entrench accountability, act with transparency and embrace technology and innovation to drive performance and value realization across strategic investment portfolios,” Kyari said while delivering a goodwill message at the opening ceremony of the 38th Annual International Conference and Exhibition of the Nigerian Association of Petroleum Explorationists (NAPE).

He reiterated the Corporation’s resolve to grow the nation’s hydrocarbon reserves to 40 billion barrels through reinvigorated exploratory activities in the inland frontier basins across the country. A statement issued by the Group General Manager, Group Public Affairs Division of NNPC, Dr. Kennie Obateru, quoted Kyari as stating that crude oil has already been discovered in the Benue Trough in commercial quantity, with Nigerian geologists spearheading the efforts.

He noted that the strategy is to aggressively explore for more oil in the frontier basins in order to grow the nation’s reserve base, in line with the Federal Government’s aspiration to hit the 40 billion barrels reserve target. Kyari said the theme of this year’s conference: “Accelerating Growth in Nigeria’s Hydrocarbon Reserves: Emerging Concepts, Challenges and Opportunities” fits squarely into NNPC’s key aspiration, which is to grow the nation’s hydrocarbon reserves, reduce unit operating cost of crude oil production to $10 per barrel and improve efficiency across its businesses.

“It is my pleasure to appreciate the good work and resilience of our inhouse professionals in the on-going inland basins exploration activities that culminated in the recent discovery of hydrocarbons in Benue Trough. NNPC is indeed proud that it is NAPE members that are spearheading this effort,” Kyari stated. According to him, NNPC has made significant progress in improving operational efficiency through the adoption of technology and deliberate effort to curtail soaring cost of operations across strategic assets. The NNPC helmsman added that in the face of the energy transition, the Corporation is focused on developing gas infrastructure and deepening domestic gas utilization, stressing that gas is the energy of the future. The GMD expressed optimism that the Petroleum Industry Bill (PIB) would be passed next year, noting that the fiscal environment proposed would attract more investment into the oil and gas industry. He assured NAPE and all other industry operators of sustained collaboration from NNPC, saying that the strategy of synergy was required in order to drive down operating cost and survive the emerging challenges in the industry.

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