In a bid to find ways of reducing operations cost to a maximum of ten dollars ($10) per barrel, the Federal Government yesterday launched the Nigerian Upstream Cost Optimisation Programme, NUCOP.
In his address, the Minister of State for Petroleum Resources, Chief Timipre Sylva, stated that currently the average cost for Joint Venture production was below $30 per barrel while that of Production Sharing Contract (PSC) production was below $20 per barrel, stressing that there was need for cost optimization in order to keep the Oil and Gas Industry afloat in Nigeria.
“Today’s engagement with industry stakeholders, under the NUCOP, is part of the resolve of this administration to confront this challenge of high production cost. I expect robust discussions and a realistic roadmap to achieve the cost optimisation objectives,” the Minister stated.
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 stakeholders.
At the launch which took place yesterday at the NNPC Towers in Abuja, the Corporation’s Group Managing Director, Malam Mele Kolo Kyari, called on stakeholders in the oil and gas industry to work together towards the target.
Kyari emphasised that the current reality of global energy transition and demand erosion occasioned by the Covid-19 pandemic has made cost optimization imperative.
It is in our informed interest to optimize our cost of production. The realities of energy transition and investor choices are very clear to us. There is no where in this world where a less cost- efficient operator can survive today,” he posited.
He disclosed that as part of efforts geared towards this direction, the Corporation under its operational theme for the year known as ‘Execution Excellence’,plans to 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.
Leaders of agencies, trade groups and labour unions in the Oil and Gas Sector such as the Nigerian Content Development and Monitoring Board (NCDMB), Oil Production Trade Section (OPTS), Independent Petroleum Producers Group (IPPG), Petroleum Technology Association of Nigeria (PETAN), Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) who spoke at the event described the initiative as a welcome development and pledged their support for NUCOP.