FG Unveils Initiative To Achieve $10 Per Barrel Oil Production Cost Target

The Federal Government on Tuesday launched the Nigerian Upstream Cost Optimization Programme aimed at reducing operations cost in the Nigeria oil and gas industry.

Specifically, the move is aimed at assisting the government to achieve its $10 or less per barrel oil production cost target.

NUCOP is an industry-wide initiative designed to optimize Nigeria’s upstream operating expenses through process enhancement and industry collaboration to ensure improved and sustainable profitability for all.

Speaking at the programme launch in Abuja, the Group Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari, stated that ensuring cost optimization has become imperative due to the current reality dictated by the global energy transition and demand erosion occasioned by the Covid-19 pandemic.

He said, “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 urged industry players to adopt measures that promote transparency, collaboration, efficiency and shared services aimed at reducing the cost of production in order to meet the target.

He further 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.

The Minister of State for Petroleum Resources, Timipre Sylva, stated that the average cost for Joint Venture production was below $30 per barrel while that of Production Sharing Contract production was below $20 per barrel.

He said that there was need for cost optimization in order to keep the Oil and Gas Industry afloat in Nigeria.

He said that the NUCOP initiative is part of the resolve of the President Muhammadu Buhari’s administration to address the challenge of high production cost.

“I expect robust discussions and a realistic roadmap to achieve the cost optimisation objectives,” the Minister stated.

Meanwhile, the Chairman, Senate Committee Upstream, Senator Bassey Akpan, in his remark assured that the 9th National Assembly would pass the Petroleum Industry Bill to provide a conducive environment for all operators in line with global best practices.

Industry stakeholders, present at the event included; the Nigerian Content Development and Monitoring Board, Oil Production Trade Section , Independent Petroleum Producers Group, Petroleum Technology Association of Nigeria.

Others are Petroleum and Natural Gas Senior Staff Association of Nigeria and the Nigeria Union of Petroleum and Natural Gas Workers.