Mike Odiegwu. Yenagoa
Federal Government has expressed serious concern over the rising cost per barrel of crude oil production in the country and its negative impact on development.
The government argued that high cost of crude production had eroded net revenue from crude sales and depleted resources earmarked for development.
Speaking during the 9th Annual Practical Nigerian Content Forum (PNCF) organised by CWC Africa in partnership with the Nigerian Content Development and Monitoring Board (NCBMD), the Minister of State for Petroleum, Chief Timipre Sylva, ranked crude production cost in the country as one of the highest among the Organization of Petroleum Exporting Countries (OPEC).
Sylva at the PNCF, which held at the NCMDB’s new headquarters in Yenagoa, Bayelsa State, said the Federal Government under President Muhammad Buhari was working to guarantee the security of oil production and increase the contribution of the oil sector to the Gross Domestic Product (GDP).
He said: “We must therefore take practical steps to ensure that we curtail the various elements that contribute to the high cost of production. The Ministry of Petroleum Resources under my supervision has selected key priority areas to contribute to the improve production, low cost of production of crude and the increase in the volume of the production capacity of the country.
“The areas are the eradication of smuggling of PMS across Nigerian borders; the completion of Gas Flare Commercialisation Programme; Increase of Crude Oil production to three million barrels per day and Reduction of the cost of Crude Oil production by at least five per cent.
“Other priorities are the increase of domestic refining capacity and implementation of the amended Deep Offshore and Inland Basin Production Sharing Contract Act. The key outcomes of these priority areas will be job creation and Poverty Reduction, which are the cardinal aspirations of the Next Level Agenda of President Muhammadu Buhari’s Government.”
Sylva commended the NCMDB led by Simbi Wabote and declared that the Federal Government was happy with the board’s performance over the years.
He said: “At the Ministry of Petroleum Resources, we are proud of Nigerian Local Content achievements in the oil and gas sector. We are delighted at the various capacities and capabilities that have been put in place since the enactment of the Nigerian Content law.
“We are also proud that these achievements are well recognized in the continent to the extent that some African countries like Kenya, Congo Brazzaville, Uganda, Gabon and Angola have come to Nigeria in the past for mentorship and peer assistance on Local Content practice and implementation.
“As you might recall, this Administration had taken strategic steps to entrench Local Content implementation beyond oil and gas through the Presidential Executive Orders 03, 05 and others.
“We are also aware of the recent pledges by the Local Content Committees of the Senate and House of Representatives to extend the Nigerian Content Act to other key sectors of the economy. This is because we can all see the benefits so far realised from the implementation of Nigerian Content requirements in the oil and gas industry”.
He also hailed the management of the NCDMB for hosting the 9th forum in Yenagoa and at its magnificent 17-storey building.
READ ALSO: Local content ’ll cut unit cost of crude oil production, says Sylva
“In touring this edifice during my first working visit to NCDMB a few weeks ago, I pointed out that the building project had gotten to the level that it is today as a result of the strong and purposeful Management team, led by the Executive Secretary, Engr. Simbi Wabote. I am proud to say we now have a World Class Conference Centre right in the heart of the Niger Delta and I applaud NCDMB for this testament of an impressive performance record”.
“While we applaud the exceptional work done by the wholly Indigenous Construction Company, Megastar Technical and Construction Company Limited, our overwhelming appreciation must go to President Muhammadu Buhari and the Federal Executive Council for the gracious and timely approvals which helped to speed up the completion of this project.
“This building serves as a strong attestation of Mr. President’s love and commitment to the development of the Niger Delta Region and I look forward to bringing him to commission this edifice in no distant time”.
Also speaking, the Managing Director of Aiteo E&P Limited, Mr. Victor Okonkwo, noted that his company was a testament of what adherence to local content could achieve in the country.
“In Aiteo we are nearly 98 per cent locally staffed and our contractors are largely local. Our procurement of goods and services are also mainly through local suppliers”, he said.
He, however, said one of the biggest challenges facing the company’s operations was the security of its pipelines and oil facilities.
He said: “Our pipelines and flowlines are constantly vandalized by unscrupulous elements tagged ‘crude oil thieves’ attempting to cause economic sabotage to our Company and the people of this great Country.
“Despite our efforts in raising NCTL uptime from 60% to over 80% since acquisition, we have recorded more shutdown days in operations due to third party infractions for over two months this year compared to previous years.
“This has resulted in loss of revenue and deferments estimated at about four million barrels so far this year. Also worrying is the amount of crude loss recorded even when the pipeline is operational, usually in the range of 25 to 35 per cent. More worrying is that even when the perpetrators of these acts are caught and handed over to security agencies, we are yet to witness any conviction.”
“Remember, Aiteo operates the NCTL which also serves four other Oil companies (Eroton, Newcross, Belema Oil and Shell) injecting into the pipeline, hence, when there are infractions on the line, these companies are also forced to shut-down; resulting in economic losses for these companies also and the Federal Government by and large.
“Despite all these challenges, we have kept our commitment to NCDMB paying up to N1.52billion in NCDMB fees and N1.5billion as NDDC levies. In addition, Aiteo has spent over N3.6billion in community support programmes and projects”.
Earlier, the Executive Secretary, NCDMB, Simbi Wabote noted that the Board’s 10-Year Strategic Plan was hinged on five pillars and four enablers.
He said each of the pillars and enablers were supported by strategic initiatives meant to propel the oil and gas industry towards 70 per cent Nigerian Content by 2027.
He also said that the board secured approvals from the Federal Executive Council to award nine contracts progress work on the development of industrial parks in Akwa Ibom, Bayelsa, and Cross River states.
Leave a Reply