Nigeria records appreciable reduction in barrel of crude oil unit cost

The minister of State for Petroleum Resources, Emmanuel Ibe Kachikwu, has said that the country has recorded an appreciable reduction in the unit cost of a barrel of crude oil.

The minster, who did not state by how much percent the unit cost has lowered, stated this in his key note address at the Olobiri lecture organised by the Nigerian Society of Engineers in Abuja, disclosing that necessary steps have been taken to lower the cost of production

The unit cost of a barrel of crude oil in the Nigerian oil and gas industry is one of the costliest in the world with the cost of a barrel going as high as between $25 and  $30.

The minister had been advocating that a unit cost of barrel should not be more than $15 at most.

The reduction in the activities of the Niger Delta militants in the oil region may have been responsible for the lowering of the unit cost of a barrel.

“Via our Big Win 5 (Transparency & Efficiency), we have successfully implemented necessary actions that have lowered the unit technical cost of production. A specific example is advocating for more collaboration across the entire value chain of our petroleum industry; this has resulted in elimination of duplicated efforts. Costs decline due to lesser capital that would have initially being expended in exerting single efforts,” he said.

He also spoke about efforts being made at making the establishment of modular refineries a reality.  Modular refinery he explained has garnered tractions in the country.

“Modular refineries have also successfully garnered traction, with already established modular refinery equipment on their way to ports in the country . Institutional investors are portraying confidence in the productive engagements we have had with them in Niger Delta,” he said.

According to the minister the efforts in Big Win 2 (Business Environment & Investment Drive) on improving our business environment have yielded positive results; as this has been able to attract investors into the entire value chain.

He said the assiduous effort of the government towards reviving the refineries has resulted in an almost-concluded process that would stimulate the flow of private investments into the revamp the country’s three refineries.

The minister who expressed appreciation to the association for its  collaborative efforts for pushing improved transparency in the operations of the oil and gas  industry  said this concept is of great importance in all works of life. “Your inputs to our policies and frameworks are duly appreciated, as this ensures all stakeholders are considered in decision-making processes.

The private and public sector all work towards the success  stressing that  the collective efforts of all  stakeholders are what ensure continuity of our sector.

“Our underlying agencies are also undergoing constant capacity development to ensure our technical abilities are apt.

This has contributed towards our avoidance of HSSE-negative Issues. The costs associated with such issues extend to the

Irreplaceable human lives; it is imperative we maintain our efforts”.

The Nigeria Oil and Gas Industry mantra; the 7 Big Wins, he said, has been able to provide solutions to the various  problems identified , with remnants that demand longer timelines, being on course to be achieved within the specific timeline.

“ Our industry’s uniqueness lies in the fact that although, our ubiquity is never questioned, our gains could ultimately be losses. Everyone uses petroleum, but not everyone who produces it is assured of quantifiable profits”.

He said although  policies implemented by others could impact on  the industry dynamics just as the inherent risks vary, adding that a nation’s ability to adequately prepare for the boom and bursts gives it adequate leverage when the market rollercoaster sets in.

Olusola Bello