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Oil Prices: OPEC Members Lose $2trn In 2 Years

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Nigeria and other member nations of the Organisation of Petroleum Exporting Countries (OPEC) have lost a cumulative sum of $2 trillion capital investment in the oil and gas industry as well as revenue generation since crude oil price in the international market tumbled in June 2014.

According to Secretary General of OPEC, Dr Mohammed Sanusi Barkindo, over $1 trillion was lost in terms of capital investments which failed to materialise and were cancelled due to dwindling oil price between June 2014 and the end of 2016.

Addressing a world press conference at the NNPC Towers in Abuja, yesterday, Barkindo said another $1 trillion was lost in terms of revenue earnings to member countries during the period the crash of 80 per cent in the price of crude from about $140 per barrel in June 2014 to about $30 per barrel in mid-2015 led to a lot of revenue loss to member countries.

He noted that for the industry to stage a comeback, there was urgent need for capital investment, and added that, while Nigeria and other OPEC countries are embarking on an economic diversification programme, the contribution of the sector to achieving such a goal remained prominent and cannot be undermined.

Barkindo who described his choice of nomination to the position of OPEC secretary general as a surprise since he never knew or met the Minister of State for Petroleum, Dr. Ibe Kachikwu prior to that, stated that he secured the job despite coming into the race late as a result of the minister’s doggedness.

He said, “For all my years at the NNPC, I have not met Ibe Kachikwu. But this gentleman decided in his own wisdom to ask his staff to look for someone named Mohammed Barkindo. I got to know through the governor of OPEC that Kachikwu decided to nominate me for this job to his boss, President Muhammadu Buhari.

“From day one, he became my campaign manager. I saw the commitment of the son of Nigeria to make the country proud. He said ‘don’t worry, we will make it’. He did all he could and forced the hand of these other countries to drop their candidates.”

Citing an example of how Kachikwu put his feet down to see him win the race, he said when the campaign for the job was heating up, the minister met with a prince of Saudi Arabia, who is that country’s petroleum minister, to convince him to support him (Barkindo) by stating five distinctive qualities that made him better than the six other candidates already in the race before he joined.

Confirming this, Kachikwu said he nominated Barkindo to the position of secretary general of the organisation because of his ability to handle and resolve problems involving statistics and numbers, just as he jocularly described the OPEC boss as a man with “intellectual insanity” to work.

The minister said, “I met with the prince and I told him I have a candidate who has seven qualities that an OPEC SG must possess. He asked me to list them, and I said: ‘1, Barkindo has the intellectual insanity to work there’. At that time, OPEC was in a rough rumble that only a mad man like Barkindo will take the job.”

The minister added that the achievements of OPEC under Barkindo within a short time showed that he was the right man for the job.

On what Barkindo had been able to achieve since he assumed office last June, Kachikwu said for the first time in the history of the oil industry, the Secretary-general was able to secure the participation of 13 OPEC nations and 11 non-OPEC countries led by the Russian Federation in cutting crude oil production deal last December.

Describing the move as a strategic rescue initiative that has brought some stability in the price of oil globally in recent times, the minister stated that to achieve that historic feat, heads of state and governors, ministers, ambassadors, and many officials from the 24 participating countries, both individually and collectively, played decisive roles in the run-up to the decision.

In another development, Barkindo disclosed that, motivated by the recent achievements of OPEC, one of Nigeria’s West African neighbours, Equatorial Guinea, had decided to join the oil cartel.

 

NNPC Cuts Oil Production Cost To $27pb

Meanwhile, the Nigerian National Petroleum Corporation (NNPC) said yesterday that it had successfully reduced its Unit Technical Cost (UTC) from $70 per barrel of crude oil obtainable in 2014 to about $27 per barrel as at the end of 2016.

Similarly, the Corporation said it has secured a $416,000 per day reduction, about N126.88 million daily, in its deep offshore rig-rate.

A statement by the NNPC in Abuja quoted its Group Managing Director, Mr. Maikanti Baru, as revealing this at the 14th annual Aret Adams Memorial Lecture.

The GMD who was represented at the event by the chief operating officer, Gas & Power, Mr. Saidu Mohammed explained that the deep offshore rig-rate was renegotiated from a staggering $580,000 to $164,000 per day.

The action, he stated, resulted in saving the country a 71.7 per cent cost of executing a similar operation in the past, even as he noted that the NNPC had achieved a 35 per cent downward review of rig rates per day for both swamp and land operations in its portfolios.

He pointed out that a rig rate is a major cost element incurred by an Exploration and Production (E&P) company in the course of drilling for oil or gas in deep offshore, shallow offshore, swamp, land areas or basins.

According to him, the various reductions serve as an incentive for investors to grow reserves, increase profitability and improve Return on Investment (ROI), adding that they also boost government revenue, thus improving government’s commitment to developmental projects across the country.

“I am proud to announce that our UTC has significantly dropped from above $70 per barrel in 2014, to about $27 per barrel, as at year end 2016. Indeed, NNPC is committed to further driving down the UTC,” he stated.

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