The Federal Government of Nigeria has made its intention to fix the Unit Operating Cost (UOC) of producing crude oil in Nigeria to $10 per barrel.
The Group Managing Director of Nigeria National Petroleum Corporation, Mele Kyari made the disclosure on Wednesday, June 10, 2020, during the second webinar series by the Nigerian Association of Explorationists (NAPE), themed “The Impact of COVID-19 on the Nigerian Oil and Gas Industry – The Way Forward”.
Speaking on the impact and reaction of Nigeria to the COVID-19 crisis, the NNPC boss said Nigeria remained resilient in the face of the Coronavirus crisis, however, it noted that the situation left the country with revenue instability.
He hinted that the move for a reduction in the cost of oil production is part of the government’s response to new realities.
Kyari insisted that any company that refuses to cut down costs to this level will be shown the way out of the industry.
He further explained that the Corporation will be engaging with its Joint Venture partners on the areas of inefficiency that they can do away with that has an effect on the cost of production.
In his words, the “Covid-19 pandemic that brought about oil glut in the international oil market made NNPC sell crude oil with a discount and this reduced the country’s expected revenue. This has made NNPC have a rethink to insist on cutting down the cost of production.
“Covid-19 also made it possible for NNPC to take a look at some services that they can discard. Adding that it’s time to infuse cost discipline shade operational inefficiency and refocus only on projects that are revenue-driven.
“We will do away with inherent inefficiency and deploy Technology to reduce cost.
“Any company that does not operate at $10 per barrel cost of production by December 2021 will be made to shut down.,” he added.