By Obas Esiedesa
Determined cut down the production cost of crude oil in the country, the Group Managing Director of the Nigerian National Petroleum Corporation ((NNPC), Mallam Mele Kyari has declared that no new project would be signed off in the industry with a benchmark cost of $10 per barrel or less.
Kyari who spoke at the weekend during a media parley with energy journalists in Abuja said the era of high oil production cost has past.
He noted that all oil and gas companies operating in Nigeria are committed to cost reduction by improving efficiency in the sector.
“In the entire upstream, everybody must produce oil at $10 or lower. NPDC is not an exception. NNPC is not cut off from the things they have to do, which you procure optimally, select the best of the assets that can produce the oil, go to the market as quickly as possible and then ultimately produce more oil than you would have done if you were less efficient.
“In the industry today, NPDC is the least cost of drilling operator in the industry because the oil rigs that others procure in the industry today will deliver wells at 12-13 dollars. We are insisting that everybody must do this where it is possible.
“We have made significant steps in getting there. Today, we are much more organized than ever before in our assets management business. No project will leave the ground today except we know that it can pay for itself and it can produce sub $10 oil”, he stated.
Kyari noted that the industry is on course to boost exploration and production with a view to raising national reserves to 40 billion barrels and production to three million barrels per day.
According to him, NNPC has “revved up exploration work in the inland basins culminating in the oil find in commercial quantity, in the Upper Benue Trough. The drilling of Kolmani River III Well is ongoing with very high prospect of oil find. Seismic data collection is ongoing in the Bida Basin and we are re-launching exploration work in the Chad Basin.
“We have also resolved a number of disputes that hampered production activities with a view to boosting production to meet the 3million barrels per day production target. Key among these are dispute involving Shell and Belema Oil that shut in over 30,000barrels per day production in OML 25.
“We have also executed the Abo OML 125 Heads of Terms leading to the resolution of the issues around most of the deep offshore production sharing contracts, paving way for eventual renewal of OML 125 and further investment in exploring the lucrative field.
“We have also secured a number of alternative funding facilities for the NPDC and some of our Joint Ventures to facilitate the development of some of our assets. These include: the N875.75m NPDC OML 65 Alternative Funding and Technical services package with CMES-OMS Petroleum Development Company, the $3.15bn Alternative Financing Package with Sterling Exploration and Energy Production Company Limited (SEEPCO) and other partners for the development of NPDC’s OML 13”, he added.