Uche Usim, Abuja
To derive maximum benefits from crude oil, the Minister of State, Petroleum Resources, Mr Timipre Sylva, said plans are afoot to reduce the production cost currently put at over $30 per barrel to less than $10 as obtains in most energy producing countries.
He unveiled the target in Abuja at the conference of the Quantity Surveyors Registration Board of Nigeria (QSRBN) in collaboration with the Petroleum Technology Development Fund (PTDF) with the theme: “Effective Cost Management in the Oil and Gas Sector”.
The Minister, who was represented by his Chief of Staff, Engr. Moses Olamide, expressed hopes that the outcome of the conference would give the oil sector the traction required to crash the cost of crude oil production to a single digit, adding that the issue should be treated as extremely urgent.
The Minister explained that countries like Saudi Arabia and United Arab Emirates (UAE) produce crude oil between $5 and $6 per barrel while it is currently over $35 per barrel in Nigeria.
According to him, it has become very expedient to change the ugly narrative of Nigeria being one of the countries with the highest cost of crude oil production in the world.
He said: “In the regime of $50-$60 per barrel price of crude oil, a cost of over $30 per barrel is unsustainable and that is why we need to come up in this programme with what we need to do to reverse the trend. In other words, the need to achieve cost management in the oil and gas sector is an urgency of yesterday.
“Nigeria is the largest economy in Africa with a GDP of about $400 billion, a population of over 180 million, 70 percent of which is below the age of 35 years, an aggressive drive for industrialisation and diversification of the economy, the potential for growth supersedes most economies in the world.”
He lamented that despite Nigeria’s quest for growing the economy and the potential for great investment opportunities, particularly in the oil and gas sector, the cost of crude oil production in the country is still one of the highest in the world.
He said that after his inauguration as Minister, President Buhari mandated him to ensure transparency and accountability, restore public and investor confidence, and set a framework that will change the pace of managing and administering the industry hinged on global best practices,
This, he said, reinforced the need for innovative policy interventions that can quickly be introduced and implemented with potential for high positive impact.
The Minister said that he already held a three-day oil and gas retreat in Lagos with heads of the agencies in the ministry, including the permanent secretary, and all the directors with the main goal of coming up with a collaborative approach to deliver on Mr President’s directives.
“It gave birth to a robust industry policy document where we target great reduction in the cost of crude oil extraction by at least 30 percent.”
Sylva pointed out to the participants in the conference that besides the bid to reduce the cost of crude oil production, the ministry recognises the importance of reducing the contract approval cycle, enhancing transparency, reducing barriers to entry and regulatory transactions costs as necessary ingredients for optimizing conducive mess of business environment, government take enhancement and maximizing value creation to all stakeholders.
He noted that currently there is an industry committee headed by the Permanent Secretary on the “Reduction of the Crude Oil Production and Crashing of the Contracting Cycle in the Oil Sector” in the Ministry.”