Energy

Cost cutting, key to economic growth — Chevron MD

Adewumi Ojo

Worried over unstable global oil prices and the need for more efficiency and effectiveness of the oil and gas industry for government’s  drive in the diversification of the nation’s  economy, the Chairman and Managing Director of Chevron Nigeria limited, Mr. Jeffrey Ewing, has challenged oil and gas stakeholders to evolve ways of managing resources and cutting cost that may serve as an unwanted cost premiums in doing business.

The oil and gas sector has over three years faced an economic downturn following drop in prices of oil and gas globally leading to drop in the nation’s revenue earnings and subsequently putting the nation into unexpected economic recession.

Mr. Ewing while delivering his keynote address  on “A Roadmap for Nigeria’s Oil and Gas industry in a Diversifying Economy” at the ongoing 2017 conference and Exhibitions of the National Association of Petroleum Explorationists (NAPE) in Lagos,  challenged the association and relevant  stakeholders  to increase  efficiency  and maximize value for expenditure and resources  that will  eliminate avoidable obstacles that directly or indirectly bite business resources and capital which leads to loss of profit.”As an industry, we must challenge our cost structure and eliminate obstacles that directly or indirectly introduce unwanted cost premiums in doing business. We must take steps to increase efficiency in what we do and do more with less funding.

We must also continue to challenge all expenditure to ensure we get maximum value for every dollar or naira spent. Each key player in the oil and gas industry must look inward and identify resource saving measure, opportunities for collaboration, efficiency and optimized operations to save costs. The more viable our business, the more we contribute to the economy”.

He  commended the role of the government in dialoging with the leadership and elders of Niger Delta region of the country.  However, he  expressed concern over persistent and recent renewed threat from militants in the area and overall state of security in the oil rich territory of the country.

“The security within the Niger Delta needs to be addressed. We are thankful for the efforts by the federal government of Nigeria to engage in dialogue with leaders in the Niger Delta and we expect that in the foreseeable future the environment will become more secure for business and for oil and gas activities to thrive. To sustain oil and gas production at required levels, security issues will have to be given priority attention”..

Ewing lauded the role government is playing in moving the nation economy out of recession and driving the economy forward  with different  and laudable policies and actions including the government Joint Venture (JV) partner in addressing JV cash call arrears  that  stimulate growth and improve  investment and government Economic Recovery  and Growth Plan (ERGP) rolled out earlier this year, acknowledging the success of the policies  to recent  report of World Bank Ease of Doing Business which saw Nigeria moving 24places to 145th across the globe and the nation also been ranked as one of the top 10 most improved economies .

He said for the country to remain globally  competitive, reduce waste and improve efficiency, the country must continue to drive initiatives in effective utilization  of Resources.develop and communicate strategy for legacy payments for gas sold to the domestic power market and also to establish a competitive deepwater gas fiscal framework.

He said: “It is evident that there is significant underpenetrated and undiscovered hydrocarbon resource and a reserve just below existing infrastructure average drill depth below mudline in the Niger Delta is approximately 10,000 to 12,000 feet. We therefore need to build a robust inventory of drill ready prospect portfolio in readiness for more favorable oil price and globally competitive fiscal policy”.

He further challenged explorationists to employ technological  resolves and seismic acquisition and processing in exploration and rejuvenation of old fronmtier basin and to discover impact resource additions for reserves replacement and growth.

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