NNPC Slashes Oil Production Cost By 71%

The Nigerian National Petroleum Corporation (NNPC) says the country now saves a massive $55 in the cost of producing one barrel crude oil.

According to a statement signed by Ndu Ughamadu, the corporation’s spokesman, the cost of production of crude oil in the country has been slashed to $23 from $78 as at August 2015.

This was made known at the inauguration of the anti-corruption committee by Dafe Sejebor, Group General Manager of National Petroleum Investment Management Services (NAPIMS), on Wednesday.

Recall that Maikanti Baru, group managing director of the NNPC, had recently directed all the strategic business units (SBUs) and corporate service units (CSUs) to establish their own anti-corruption committees.

Following the development, the country now saves $3 billion annually, Sejebor said.

“If you knock down your cost of production from $78 per barrel to $23, take the difference and multiply by the average daily production, you will discover that we are saving a minimum of $3billion in the upstream for both Production Sharing Contracts (PSCs) and Joint Ventures (JVs),” he said.

The GM said the corporation is looking to further bring down the cost to a target of between $17 and $19 for onshore and offshore.

“He commended the federal government for its support to the NNPC management in tackling the challenges in the petroleum industry, especially the cash call exit agreement signed in 2016 and the reduction of contracting circle from three years to six months,” the statement read.

At $23, Nigeria’s cost of production is still higher than those of countries like Saudi Arabia, Iran and Iraq which produces at about $9 to $10 per barrel.

Sejebor said the new petroleum policy was policy would restore investors’ confidence in the industry pending the full passage of the entire Petroleum Industry Bill by the National Assembly.