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NNPC seeks to reduce

production costs

NIGERIA MELE Kyari, the group managing director of Even so, he said, NNPC is taking steps to
Nigerian National Petroleum Corp. (NNPC), bring production costs down. The company has
has identified reduced production costs as one already racked up some successes by working to
of his company’s priorities. “negotiate with its partners to cut down on con-
Kyari told journalists during an online con- tracts’ life cycle, selecting the right projects [and]
ference last week that high production costs were engaging the right institutions to bring down the
a handicap for state-owned NNPC. They have cost,” he stated.
become an even bigger source of concern now Kyari continued: “Our ultimate target we
that the coronavirus (COVID-19) pandemic has have set for ourselves is to bring the cost down
caused world oil prices to fall sharply, he said. to at most $10 per barrel. This will come at a cost
The company cannot sustain a situation in and huge challenges ... But I can assure you [that]
which the cost of production can go as high as at any cost, we will take steps to bring this cost
$35.97 per barrel while crude commands a price down so that our country will benefit and the oil
of $13 per barrel, as it did recently, he added. As industry will become a profitable business for the
such, it hopes to bring the figure down to $10 per 200mn Nigerians.”
barrel on average by 2021, he said. NNPC expects to run into some obstacles,
“Oil prices have gone down to [less than] he said, because there are certain businesses and
$10 per barrel, due to the economic impacts of institutions in the country that benefit directly
COVID-19, resulting in crude oil supply and from high production costs. He did not name
demand imbalances,” he commented. “[The] any culprits but said that his company was
cost of production has always been a major issue determined to make sure that expenses were not
for NNPC. Without cost reduction, there will be inflated. “With such people, the meaning is that
no tax revenues, and therefore the investments we are paying about three times more than what
would not be worth the while, with unmet we should,” he remarked.™
expectations.”

P8 www. NEWSBASE .com Week 22 04•June•2020