Nigeria Saves $3B Annually From 71% Reduction In Crude Oil Production Costs – NNPC

by Ike Obudulu Last updated on August 26th, 2017,

ABUJA, NIGERIA. The Nigerian National Petroleum Corporation (NNPC) said yesterday that the country has saved a minimum of $3billion per annum by cutting the cost of crude oil production from $78 dollars per barrel to $23 per barrel as at August 2015, representing 70.5 per cent reduction. The Group General Manager of National Petroleum Investment Management Services (NAPIMS), a unit of NNPC, Engr. Dafe Sejebor, disclosed this during the inauguration of the anti-corruption committee of the unit.

A statement issued by the Corporation’s spokesperson, Ndu Ughamadu, noted that NAPIMS arrived at the figure after looking at the difference between the $78 and $23 which represent the old and new cost of production in relation to the present daily average production in the country.

“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)”, Engr. Sejebor was quoted as saying.

The GGM added that the target was to bring the cost of production to between $17 and $19 for onshore and offshore production respectively.
On the new Petroleum Policy, Sejebor said it was necessitated by the increasing difficulty in operating the petroleum industry within the framework of the old Petroleum Act in the face of the delayed passage of the Petroleum Industry Bill (PIB).

He said the policy would restore investors’ confidence in the industry pending the full passage of the entire PIB by the National Assembly.
On the NAPIMS anti-corruption committee, Sajebor urged the management and staff to let the principles of accountability, integrity, honesty and transparency be their watchword.

He charged them to generate positive ideas to help tackle the challenges facing the industry and help reverse its fortunes.
He admonished staff to key into the NNPC management’s zero tolerance for corruption.

He also 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.

It would be recalled that the GMD of NNPC, Dr Maikanti Baru, while inaugurating the Anti-Corruption Unit at the corporate headquarters recently, had directed all the Strategic Business Units (SBUs) and Corporate Service Units (CSUs) to establish their own anti-corruption committees, a directive which NAPIMS was the first to comply with.

Technological advances in drilling efficiency are one of the reasons oil and natural gas production continues to skyrocket in Nigeria’s biggest oil and natural gas fields. More precise drilling technology means that energy companies can drill more wells per rig and drill into higher-yielding pockets of oil and gas. Energy companies have been focusing on drilling “sweet spot” areas in oil and gas fields, areas where a greater concentration of oil and gas can be found and extracted.

Drilling techniques have been refined to maximize the oil and gas bearing area that each well can access, and drillers are likely to have used fracking to increase the amount of oil and gas they can extract and bring to market.

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Ike Obudulu

Ike Obudulu

Versatile Certified Fraud Examiner, Chartered Accountant, Certified Internal Auditor with an MBA in Finance And Investments who has both worked for and consulted with some of the world's largest companies on main street and wall street in over 20 countries, Ike brings his extensive reporting and investigations experience to bear on his role as Chief Editor.
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