PRODUCE AT $10 PER BARREL IN 2021 OR GIVE WAY, NNPC GMD TELLS OIL COMPANIES

BY ONYEKA AJUMOBI ONOCHIE
Oil companies producing in Nigeria have been admonished to produce at $10 per barrel in 2021 or be prepared to give way.
The Group Managing Director, Nigerian National Petroleum Corporation, NNPC, Mallam Mele Kyari, gave the warning yesterday during a Webinar on the impact of COVID-19 on the Nigerian oil and gas industry and the way forward.
At the Webinar organized by the National Association of Petroleum Explorationists (NAPE), Kyari noted that $10 per barrel cost of production is now the expectation of the industry by the end of 2021, insisting that the cost was achievable as the NNPC was already initiating a new cost structure deemed to be realizable.
“We did have a plan and of course, you have to consider this situation and bring down your cost substantially,” he advised,” adding, “our realization is that there are areas that can be utilized to bring down cost. The number of cost elements that we deal with today should not be there in the first place.”
According to him, COVID-19 has come with its own side, in that NNPC has now realized how many people the industry management can do without, services it doesn’t have to sustain, and careful analysis has shown that it can work on its plan with a view to bringing down the cost and be able to sustain production.
“You cannot explain the gap between one company producing oil at $93 per barrel and another at $9 per barrel. It is simply unacceptable and cannot continue,” the GMD stressed, adding that “the industry must work together to bring things in harmony.”
He continued, “Our target is to bring the cost down to $10 per barrel for everybody, and if you can’t do this, walk away because this is not a business of subsidy. Upstream is never subsidized anywhere in the world. It is either you make money or you walk away.
Kyari who noted that the time for business as usual was over emphasized the need for companies to be cost efficient and do away with unnecessary expenses in the industry, noting that today’s cost levels are quite unrealistic.