…re-negotiate with contractors -Degeconek MD
By Shorunke Tunde
The Petroleum Technology Association of Nigeria (PETAN) has advice the upstream regulator to work with them to arrive at $10 per barrel or below benchmark.
The Nigerian National Petroleum Corporation (NNPC) made the benchmark known through its Chief Operating Officer, Roland Ewubare that the corporation is taking measures to bring down cost of crude oil production in the country to $10 per barrel or below.
Speaking with Nigerian NewsDirect, the Publicity Secretary of Petroleum Technology Association of Nigeria (PETAN), Henry Okolie-Aboh said “NNPC will need to do alot of works to cut cost of oil production to $10 per barrel.”
“Working with group like Petroleum Technology Association of Nigeria (PETAN) will help foster NNPC plans to cut cost of crude oil production from drilling and every other steps of production.
“For them to cut cost they need to engage with professionals like us to help analyse and effectively produce at a cheaper price.”
Also Speaking with Nigerian NewsDirect, Managing Director, Degeconek, Abiodun Adesanya, said “It won’t be easy for NNPC to cut cost of oil production to $10 per barrel and if so they will need to do alot of works.
“However, we are not new to oil price instability in the industry but when it comes every one will want to cut cost for them to meet up with global standard price.
“We have two major cost component of producing oil in Nigeria: technical cost and non-technical cost where the technical consist of the contractor cost and the likes, while non-technical cost are MoU signed with host community, Navy and other levies.
“It only in Nigeria we have technical and non-technical cost, other countries don’t have non-technical cost, however if NNPC will cut cost there will need to be a form of re-negotiation between parties (contractors and others).
“In all, NNPC need to look in-depth how to cut cost effectively and look at other areas affecting there rise in expense of production.”
According to a press statement that was signed by NNPC’s Group General Manager, Group Public Affairs Division, Dr. Kennie Obateru, this was disclosed by the Corporation’s Chief Operating Officer (COO), Ventures and Business Development, Mr. Roland Ewubare, on Friday.
Ewubare pointed out that the peculiarity of the terrain was an important factor in determining cost, with such issues as pipeline vandalism, crude oil theft, and some others being critical factors that are peculiar to the Nigerian terrain and would definitely drive up crude oil production cost in the country.
He also stated that NNPC was looking very closely at such variables as logistics, security, and transportation with a view to reducing cost of production to $10 per barrel or below.
He said the NNPC had done a lot over the years to reduce contracting cycle adding that the National Petroleum Investment Management Services (NAPIMS) achieved a six-month contracting cycle when he was the Services Group General Manager.
On production cuts agreed by members of the Organisation of the Petroleum Exporting Countries (OPEC) and its non-member allies, Ewubare affirmed that Nigeria was in full compliance with the agreed output cuts, saying claims that Nigeria has not complied with the directive were true.
He said: “There is confusion in the market around the parameters for the production cuts. Nigeria has a full production capacity of about 2.3mbpd. We are currently producing between 1.6 and 1.7mbpd. Our OPEC quota as a result of the cuts is about 1.4mbpd.
“You and I know that condensate is not included in the computation of the cut numbers. So what we have is 1.4mbpd of crude oil.
“The little you see above 1.4mbpd is made up of condensate which does not count as part of the basis for assessing our OPEC quota.”