ABUJA, (Sundiata Post) – The Nigerian National Petroleum Corporation (NNPC) said on Thursday it has successfully reduced its Unit Technical Cost (UTC), from $70 per barrel of crude oil obtainable in 2014, to about $27 per barrel as at the end of 2016.
Similarly, the Corporation said it has secured a $416,000 per day reduction, about N126.88 million daily, in its deep offshore rig-rate.
A statement by the NNPC in Abuja, said the Group Managing Director, NNPC Mr. Maikanti Baru, revealed this at the 14th Annual Aret Adams Memorial Lecture.
The GMD who was represented at the event by the Chief Operating Officer, Gas & Power, Mr. Saidu Mohammed explained that the deep offshore rig-rate was renegotiated from a staggering $580,000 to $164,000 per day.
The action he stated resulted in saving the country a 71.7 per cent cost of executing a similar operation in the past.
He stated that the NNPC had achieved a 35 per cent downward review of rig rates per day for both swamp and land operations in its portfolios.
He pointed out that a rig rate is a major cost element incurred by an Exploration and Production (E&P) company in the course of drilling for oil or gas in deep offshore, shallow offshore, swamp, land areas or basins.
According to him, the various reductions serve as an incentive for investors to grow reserves, increase profitability and improve Return on Investment (ROI), adding that they also boost government revenue, thus improving government’s commitment to developmental projects across the country.
“I am proud to announce that our UTC has significantly dropped from above $70 per barrel in 2014, to about $27 per barrel, as at year end 2016. Indeed, NNPC is committed to further driving down the UTC,” he stated
The GMD therefore solicited the support of all industry stakeholders to achieve more of these lofty aspirations, stressing that there is an urgent need to link the industry with other sectors of the Nigerian economy.
“Price may not be readily under our control, but we need to manage cost of production within the Industry. Within the period we took over the reign of leadership in the Corporation, we have been able to drive down cost to a very commendable level,” he said.
Speaking further Dr. Baru noted that to achieve the 40 billion barrels of crude oil reserves and a production of four million barrels per day government’s aspiration by 2020, the country needs an incremental of at least one billion barrels in reserves year-on-year till 2020, and at minimum, half a million barrels in incremental production capacity per day within the same timeframe.
His word, “Considering our quest for revenue generation as a nation, it is a given that we need to increase our exploration efforts in order to sustain our reserve base and grow production.”
He charged industry stakeholders to invest in exploration activities, especially now that crude oil price is low, so that when the tide turns, all that would need to be done would be to turn on the taps.
In his opening remarks, the Chairman of the occasion and former Minister of State for Petroleum, Mr. Odein Ajumogobia, said there was no better time to discuss increased oil production than now.
On his part, Chairman of the Aret Adams Foundation, Mr. Egbert Imomoh, said Nigeria should position itself for the future by finding more oil and producing more of the black gold.