The Minister of State for Petroleum Resources, Chief Timipre Sylva Tuesday sought the reduction of the cost of crude oil from over $30 per barrel to less than $10 per barrel.
He made the call 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) with theme: Effective Cost Management in the Oil and Gas Sector.
Represented by his Chief of Staff Engr. Moses Olamide 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!”
In a cost comparative analysis, the minister noted that Nigeria is one of the countries with the highest cost of crude oil production in the world.
He said that countries like 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.
Insisting that the stakeholders must prune the cost, he said that “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 Tuesday.”
According to him, Nigeria is the largest economy in Africa. He added that with a GDP of about $400 billion, a population of over 180 million- 70 percent of which is below the age of 35 years, an aggressive drive for industrialization and diversification of economy, the potentials for growth supersedes most economies in the world.
He lamented that despite Nigeria’s quest for growing the economy and the potentials for great investment opportunities particularly in the oil and gas sector, the cost of crude oil production in the country is still one of the highest in the globe.
Sylva recalled shortly after his inauguration as the minister by President Muhammadu Buhari, he 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 that he had already held a 3-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, “gave birth to a robust industry policy document where we target great reduction in the cost of crude oil extraction by at least 30 percent.”
Sylva pointed out to the participants in the conference that besides the bid to reduce the cost of crude oil production, the ministry recognized the importance of reducing the contract approval cycle, enhancing transparency, reducing barriers to entry and regulatory transactions costs as necessary ingredients for optimizing conducive mess of business environment, government take enhancement and maximizing 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.