The Nigerian National Petroleum
Corporation (NNPC) has denied insinuations that government was just
keen on raising money through the
Marginal Field bid process.
Group managing director of the
corporation, Mallam Mele Kyari,
who stated this yesterday at the Nigerian Association of Petroleum
Explorationists (NAPE), Webinar
Series, said the whole idea was to
stimulate and energise local indus- tries, create job opportunities and
sustain indigenous operations.
Kyari, said government is determined to continue with the process,
because the fields have been dormant
for between 30 to 40 years.
He said that only proper fiscal
framework can facilitate and accel- erate new oil field licensing round
bid in the country.
According to Kyari, without legal
framework, bid round may not work,
adding that the industry is moving
ahead for opportunity to close the issues around Petroleum Industry Bill.
Speaking on the theme, “The Impact of COVID-19 on the Nigerian
oil and gas industry – The Way Forward”, he said the industry has not
properly monetised resources in the
last 15 years despite various government interventions.
He said currently it is only the
NNPC that has sustainably proceeded with exploration activities and
building reserves. The GMD also
observed that cost of production has
remained a big issue in the industry and largely threatening operators.
“When we took charge, we knew
all along that our cost of production
was high and such cost is not acceptable, as a result of lots of factors including structural inefficiencies in
“There are also issue of environmental consideration. Contractors
will factor all associated risks for
doing business here in terms of human resources, materials or whatever you can think of. Every cost has
a premium that’s related to our environment.
“Those premiums are so exaggerated, it is not true. Suppliers and
contractors have taken advantage of
it to hype the cost in this country and
that’s the reality.” he said.
He warned that any company that
do not operate at $10 per barrel cost
of production by 2021 will be made
to shut down, noting that the Covid-19 pandemic that brought about
oil glut in the international oil market made NNPC to sell crude oil
with discount and this reduced the
country’s expected revenue.
This he said has made NNPC to
have a rethink to insist on cutting
down cost of production.
According to him there are a lot of unexplainable activities going on in the oil and gas industry and the experiences of the challenges of Covid-19 made it
possible for NNPC to take a look at
some services that they can discard.
Kyari said the time has come to infuse cost discipline, shade operational inefficiency and refocus only
on projects that is revenue driven.
“We will do away with inherent inefficiency and deploy technology to reduce cost” he said.