Digital Technology Will Drive Efficiency In Oil And Gas Sector – Stakeholders

Stakeholders in the Petroleum Industry have stressed on the need for operators to leverage on digital technology to drive efficiency and ensure reduced cost of production in the sector.

Speaking at the E&P industry cost reduction webinar series organised by the Integrated Data Services Limited, stakeholders noted that with the shock in the market which was occasioned by the COVID-19 pandemic, there is need to embrace operational changes in order to ensure a sustainable business environment.

The General Manager, Western Asset, SEPLAT, Afolabi A.F, in his presentation noted that digital technology plays a significant role in ensuring increased productivity, cost reduction as well as asset management.

Afolabi said that there is need to create a dynamic business culture that allows for innovation with the use of technology to enhance the operations of businesses in the sector.

He said, “Promoting digital operating model is necessary at this time in order to allow continuous flow of operations, and increase productivity”.

“There is also need for us to have a dynamic culture that allows for innovation, capacity development through training, and clarity of business priority.”

He further explained that there is need for companies to embrace automation and digitalization of business processes to save cost.

The Group Managing Director, NNPC, Mele Kyari had set an oil production cost target ceiling of $10 per barrel by 2021, noting that high oil production cost was a major concern in the face of the sharp decline in crude oil prices as a result of the impact of the Coronavirus pandemic on the global oil market.

Danlandi Inuwa, Group General Manager, Information Technology Division, NNPC stressed on the need for companies to optimise resources to remain competitive and profitable.

He said that a well crafted digitalization program is imperative to drive an efficient operation process and aid achievement of $10/barrel cost target by 2021.

He said, “Technology should be considered as an integral part of our business strategy. Digital technology must be integrated into our business system to enhance operational efficiency.

“The major cost driver in the sector currently includes the human resources management which accounts for over 50 per cent of the unit operating cost, transportation, logistics, security, production management cost and power.

“There is a correlation between the drivers, hence there is need for us to critically look at these cost and bring them to a more competitive level.

“The development and use of local content and adoption of digital technology is a vital tool to driving down cost.”

The General Manager, Asset Development, Chevron, Kunle Adeyemo, in his remark said that it is important for companies to recognise the need for change in mode of operations as the COVID-19 pandemic has made the pricing environment more volatile.

“With the volatility of the pricing environment, we cannot continue to do business the same way, otherwise we will not have a sustainable business.

“In times like this we need to recognise that digital technology is imperative for us to deliver on our business objective,” he added.

He explained that the need to reduce operating cost and capital costs of delivering projects cannot be overemphasized at this time, as there has been a drastic decline in earnings.

He stressed on the need to develop framework that enables innovation, free flow of data and continuous capacity building of staff.

“What we need now is best operating practices, policies and processes that reduces cost while leveraging on digitalization and building human capacity,” he said.

The Chief Operating Officer, Upstream, NNPC, Adokiye Tombomieye, said that the need to re-evaluate the production processes for cost efficiency, has shed light on the importance of digital revolution.

He said, “Due to the pandemic, we need to do things differently to stay afloat. It has become important to change the narrative of oil production.”

He explained that achieving operational efficiency requires re-engineering of the traditional business process with digital technology.

Effective business automation, according to him will lead to standardised process and improve the entire value chain in the oil and gas sector.