Nigeria worries over high production cost for oil, gas
. Targets new technologies to exploit energy resources
By Fredrick Wright
The high production cost for oil and gas resources has triggered concerns among major stakeholders in the industry.
This situation has led to high cost of finished products and reduced profits, therefore compelling the industry to adopt modern technologies.
Based on official statistics, Nigeria is one of the oil producing countries that has the highest cost of oil production. For instance, while it costs an average of $8.38 to produce a barrel of crude oil in Saudi Arabia, it costs Iran and Iraq about $9.08 and $10.57 respectively, it costs Nigeria $17 to produce a barrel of crude oil.
President Mohammadu Buhari, at the 4th Edition of the Nigeria International Petroleum Summit in Abuja emphasised the importance of lower cost as the future energy, stressing the need to drive down production cost per barrel.
He reiterated the government’s determination to boost production to 4 million barrels per day and build up the nation’s crude oil reserves to 40 billion barrels.
Represented by the Minister of State for Petroleum Resources, Chief Timipre Sylva, he said: “The ambitious goal of ramping up crude oil production to at least 4.0 million barrels per day and building a reserve of 40 billion barrels remains sacrosanct and guiding principle to our overall outlook for the industry, creating the conducive business environment for hydrocarbon industry to thrive, is no longer a choice. It is a necessity.”
According to him, the theme of the summit reflected the need to adopt new approaches to the future of hydrocarbons by redefining objectives and providing the pathway for rediscovery.
Buhari noted that accelerated and unprecedented demand disruption as well as supply glut that generated crises for the global economy and the oil industry.
Stating that the crises has challenges and opportunities, the President identified hat the global agenda for energy transition that was taking the backseat must be tackled.
He said governments across the world were now more focused on managing the COVID-19 pandemic and its impact on economies than the quest for energy transition.
The President said: “However, energy transition is real, renewable technologies are getting cheaper and investors are increasingly conscious of environmental issues, and are beginning to turn their back on hydrocarbon investments.
“But history has shown that human beings have such appetite for energy, which renewable does not have the capacity to cope with in the foreseeable future.”
According to him, experts have projected that about 80 per cent of the world’s energy mix in 2040 would still come from hydrocarbons.
He noted that fossil fuels would continue to be the source of dozens of petrochemicals, petrochemicals feedstock that companies will transform into versatile and valued materials for modern life.
Buhari said: “Thus, hopefully, the hydrocarbon industry will still remain a multi-trillion dollar industry in the coming decades. For us as a country with a vast hydrocarbon potential, that is an opportunity.”
The Group Managing Director (GMD), Nigerian National Petroleum Corporation (NNPC), Mele Kyari, also said cost will shape the future of the oil industry.
Kyari said the COVID-19 pandemic had shown that only the best of producers would survive, noting that cost-control had become a major issue in the industry.
He identified paucity of resources and the overall reluctance by investing companies and banking authorities responsible for the funding problem.
The NNPC boss cited insecurity as a major issue for the corporation’s business, noting that efforts were on across the industry in the Niger Delta and all other locations to protect its facilities.
“We are aware that the significant work has been done, the level of security issues has clearly diminished. But there is still work to be done,” Kyari said.
Urging the companies to strive to be energy firms instead on dishing out solely oil and gas, Kyari said: “You must automate, you must reduce your cost, you must be more efficient. And also you must be more collaborative in our approaches and this has paid off for us.
“Ultimately, this crisis is surely an opportunity for us to do many things differently and particularly more so in our country to deal where the enormous gas resources can be converted to value, and who can join the journey for blue and green hydrogen.”
OPEC Secretary-General Mohammed Sanusi Barkindo said the Organisation had revised its global economic demand forecast up to 5.5 per cent for the year and the oil demand growth forecast remains at 6 mb/d.
According to him, it should be borne in mind that the majority of this demand is back-loaded to the second half of this year.
He recalled that from 2014 to 2016, world oil supply growth outpaced that of oil demand, with world oil supply growing by 5.8mbd, while world oil demand increased by 4.3mbd.
Meanwhile, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Wabote has urged PETAN members to continue to acquire and upgrade new technologies in their respective facilities to be be better positioned in oil and gas service operations and contract execution.
He challenged members to make this commitment in the interest of deepening local content and increase capacities in the sector.
“I have visited many PETAN member service companies and many are doing exceptionally well. However, I want the present leadership to make the acquisition of new technologies an additional prerequisite for membership to ensure speedy and impactful development in the Nigerian oil and gas industry.
