The Minister of State for Petroleum Resources, Chief Timipre Sylva yesterday said oil production cost in the country is one of the highest in the world at double digits.
He said countries such as Saudi Arabia and United Arab Emirates (UAE) are producing crude oil between $5 and $6 per barrel while it is presently over $35 per barrel in Nigeria.
He therefore sought the reduction to less than $10 per barrel.
He spoke in Abuja as the Special Guest of Honour at the conference of the Quantity Surveyors Registration Board of Nigeria (QSRBN) in collaboration with the Petroleum Technology Development Fund (PTDF).
Represented by Moses Olamide, his Chief of Staff, the minister said: “It is my hope that we shall use the outcome of this conference to give our oil sector the propulsion they require to bring down the cost of crude oil production to a single digit as obtainable in other economies. This is an urgency of yesterday!”
The oil minister said the stakeholders must prune the cost. “In the regime of $50-$60 per barrel price of crude oil, a cost of over $30 per barrel is unsustainable and that is why we need to come up in this programme with what we need to do to reverse the trend. In other words, the need to achieve cost management in the oil and gas sector is an urgency of yesterday,” he said.
According to him, Nigeria is the largest economy in Africa with a gross domestic product (GDP) of about $400 billion, a population of over 180 million- 70 per cent of which is below the age of 35 years, an aggressive drive for industrialisation and diversification of economy, the potential for growth supersedes most economies in the world.
He lamented that despite the country’s quest for growing the economy and the potential for great investment opportunities particularly in the oil and gas sector, the cost of crude oil production is still one of the highest in the globe.
Sylva recalled shortly after his inauguration as the minister, President Muhammadu Buhari mandated him to ensure transparency and accountability, restore public and investor confidence, and set a framework that will change the pace of managing and administering the industry hinged on global best practices,
This, he said, reinforced the need for innovative policy interventions that can quickly be introduced and implemented with potential for high positive impact.
The minister said he had already held a three-day oil and gas retreat in Lagos with heads of the agencies in the ministry including the permanent secretary and all the directors with the main objective to come up with collaborative approach to deliver Mr. President’s directives.
This, according to him, “ave birth to a robust industry policy document where we target great reduction in the cost of crude oil extraction by at least 30 per cent.”
Sylva pointed out to the participants in the conference that besides the bid to reduce the cost of crude oil production, the ministry recognised the importance of reducing the contract approval cycle, enhancing transparency, reducing barriers to entry and regulatory transactions costs as necessary ingredients for optimising conducive mess of business environment, government take enhancement and maximsing value creation to all stakeholders.
He noted that currently, there is an industry committee headed by the Permanent Secretary on “Reduction of the Crude Oil Production and Crashing of the Contracting Cycle in the Oil Sector” in the ministry.
He tasked the participants on considering the following cost drivers: insecurity in the oil producing regions, long contracting circle, the governance structure, fiscal policies and local content issues.
Speaking, the PTDF Executive Secretary, Dr. Aliyu Gusau said that the irises of cost engineering, cost control, cost estimating as well as other cost management are among the areas of greatest challenge in the oil and gas sector.
He said it was on the background that the fund was collaborating with QSBRN in organising the workshop to place very key issues on the front burner.
