Despite claims by the Federal Government that it has succeeded in crashing oil production cost to $23 per barrel, Nigeria is said to be among the top 10 countries with the highest cost.
Chairman of the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry (LCCI), Mr. Paul McGrath, stated this at the 2019 edition of the Association of Energy Correspondents of Nigeria (NAEC) annual conference with the theme ‘‘Harnessing oil and Gas Potential for National Development’ held in Lagos last week.
McGrath, who is also the Managing Director of Exxonmobil affiliate companies in Nigeria, lamented that, high cost is a major disincentive to investment, especially at this time of considerable global competitiveness.
He worried that operating costs are increasing due to an attendant increase in required maintenance and well work-overs, while security costs are escalating as peculiarities of the business environment require that additional resources be deployed to secure people and assets.
According to him, for Nigeria to remain profitable, we need to collectively consider modalities and mechanisms for cost reduction.
‘‘ Our Governments, at respective arms and tiers, will need to institute stable and globally competitive fiscal policies, a robust legal framework and a healthy contract integrity culture. To the extent consistent with the law, operators in the industry will need to explore cost sharing options (e.g. in areas of logistics, supply chain, security, technology, etc.). This can only happen with collaboration among relevant stakeholders and sustained advocacy by the vibrant Nigerian media.
While our industry explores opportunities to sustain this conversation, I am pleased to state that we are seeing positive results of this collaboration, especially on the part of our partner, the Nigerian National Petroleum Corporation.
“I congratulate the NNPC on the solid achievements so far recorded in resolving some seemingly intractable industry challenges, with a being the Joint Venture Cash Call repayments. I’m confident that working collaboratively, we can collectively achieve more for the long term benefit of Nigeria. He tasked the media and other stakeholders to see themselves as partners in progress, in the overall interest of peace, progress, prosperity and development of our industry and the country.
He disclosed that, over the years, the oil and gas sector has been a major driver of the nation’s economy.
‘‘Through operations and activities of key industry players, there has been significant value addition in terms of economic power of the people, manpower utilization and development, foreign exchange earnings, fiscal growth index, etc. These macro-benefits all translate to two things – the development of the country and the empowerment of the people.
“So, in summary, can Nigeria’s oil and gas potential be harnessed better for national development? The answer is yes! The key, however, lies in active collaboration by all stakeholders, with the media playing a key part.’’