NNPC negotiates cut in oil production cost to $10 per barrel

Minister of State for Petroleum Resources, Timipre Sylva, has said the Nigerian National Petroleum Corporation (NNPC) has begun activities to drive down its operating cost to $10 per barrel.

He spoke on Thursday at the Seplat Energy Summit 2020 with the theme “Business Sustainability and Strategic Leadership in Africa.”

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Sylva said the NNPC was presently renegotiating its contracts by at least 30 percent.

Currently, the cost of crude production in Nigeria is about $30 per barrel of crude. Experts said the rate is quite problematic given that oil is trading at $39 per barrel.

Group Managing Director of NNPC, Mele Kyari, said Africa had huge gas resources, particularly in Nigeria, which could be harnessed and leveraged for other opportunities.

“We must not lose sight of the fact that the world is transiting to renewable. Gas business is the future,” Kyari said.

“We need to leverage on Africa over 527 TCF proven natural gas reserves and use that side by sides complementary to building up our renewables profile as well which Nigeria should be championing,” Audrey Joe-Ezigbo, President of Nigerian Gas Association said.

Roger Brown, incoming CEO of Seplat said Africa needs to build that baseload for which it can build from and drive it’s gas agenda which Nigeria can lead through renewable energy.

On financing the energy sector, a former head of Security and Exchange Commission (SEC), Arunma Oteh, urged energy companies to optimize their cash flow by cost cutting and rationalising asset portfolio.

Oscar Onyema, CEO of Nigerian Stock Exchange (NSE) said domestic investors are still willing to continue to invest in oil and gas sector but said the sector will continue to experience external pressure in 2020.

President and Chairman of the Board of Directors, African Export-Import Bank (Afrexim), Benedict Oramah, said the future for Africa is integration which was why African Continental Free Trade Area (AfCFTA) was initiated.

Seplat’s Chairman Ambrosie Orjiako said the company would continue to be a trailblazer.

“Seplat’s growing gas business will become a very audacious first step towards making sure that our operations are aligned with the climate change narrative,” Orjiako said.