FG moves to achieve $10 per barrel oil production cost

The Federal Government (FG) on Tuesday called on stakeholders to ensure cost optimization to achieve the $10 or less per barrel oil  production cost target.

It said this became imperative to keep the Oil and Gas Industry afloat in Nigeria.

The Minister of State for Petroleum Resources, Timipre Sylva, stated this at the launch of the Nigerian Upstream Cost Optimisation Programme (NUCOP), in Abuja.

According to him, the current average cost for Joint Venture production is below $30 per barrel while that of Production Sharing Contract (PSC) production is below $20 per barrel.

“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,” the Minister added.

Earlier, the Group Managing Director of NNPC,  Mele Kyari called on stakeholders in the oil and gas industry to work towards achieving the target.

He said the current reality dictated by the global energy transition and demand erosion occasioned by the Covid-19 pandemic has made cost optimization imperative.

“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.

To this end, he 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.

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.

 

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