THE Nigerian government has launched the Nigerian Upstream Cost Optimisation Programme, which is aimed at boosting industry collaboration and process enhancement, according to Minister of State for Petroleum Resources, Timipre Sylva.
The programme aims to cut down the cost of crude oil production to $10 per barrel as a reduction of oil extraction costs remains pivotal to allowing the country to maximise profits from oil. The minister further stated that the high cost of oil production will rob the country of its desire to attract foreign investment and be a globally competitive oil player.
He listed a few issues that need to be fixed including capital expenditure, operational cost, a high magnitude of crude loss and the multiplicity of tariffs He noted that currently, the average total cost is now below $30 per barrel for joint venture contracts and less than $20 for production sharing contracts, urging that more needs to be done to reach a consensus to facilitate a reduced cost of extraction.
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Alhaji Mele Kyari, said the corporation is making progress towards securing $2bn in financing by June 2021 in a bid to overhaul the Warri and Kaduna refineries. Kyari also mentioned that an effort to finance repairs to the Port Harcourt refinery was underway after a pre-finance bid for more than $1bn was oversubscribed. He further stated that repayment of finance raised will be from profits and fuel cargoes from the refineries and not in oil cargoes.
Kyari stated that NNPC is renegotiating commercial contract terms with major oil firms to allow for investment in the sector to continue to flow, which is crucial for the nation’s economy. He anticipated that the new commercial terms would be finalised before the Petroleum Industry Bill is passed.