Page 12 - AfrOil Week 47

AfrOil PERFORMANCE AfrOil

Wunti explained his call for cost-cutting by By contrast, Nigeria’s federal budget of NGN10.8
pointing out that market conditions would not trillion (28.4bn) covers around 200mn people,
support upstream projects that carried high equivalent to around NGN54,000 ($141.92) per
production costs. Weak demand and low prices person.
have already led international oil companies “We have to address all these things concur-
(IOCs) to slash their investment budgets this rently to reduce our unit operating costs,” the
year, and more cuts are likely, he said. general manager said. “We are taking them one
“[Across] the globe, everybody is trying to by one and focusing on the first three (human
manage [their] costs in such a way that [they] resources, logistics and direct handling costs),
can continue to be profitable,” he commented. and we are engaging the industry to see how best
Some IOCs have concluded that they have no we can achieve this.” ™
choice but to eliminate jobs and trim production
costs in order to achieve this aim, he said.
“We are operating in a very high-cost envi-
ronment, and because the cost is very harsh, it
[undermines] our [chances of] survival in the
industry. We have to do what we need to do to
bring it down. Otherwise, it will bring us down.
So the option is either we bring cost down, or it
will bring us down,” he said, according to Daily
Trust.
Currently, Wunti said, expenses related to
direct handling, human resources and logistics
account for 70% of NNPC’s production costs,
while the remaining 30% covers expenses related
to administration, direct lifting, production
maintenance, security and service management.
With respect to human resources, he said, the
company spends about NGN785bn ($2.06bn)
per year on less than 50,000 employees, or more
than NGN15.7mn ($41,261.50) per employee. NNPC spends more than $40,000 per year on each employee (Photo: File)

POLICY
Nigerian government signs MoU on

potential fuel imports from Niger

NIGER/NIGERIA NIGERIA has signed a memorandum of the market for these products,” he explained.
understanding (MoU) on potentially obtaining “Therefore, this is going to be a win-win relation
petroleum product supplies from neighbouring for both countries. My hope is that this is going
Niger, the former’s petroleum ministry said on to be the beginning of deepening trade relations
social media on November 19. between Niger Republic and Nigeria.”
In statements on Facebook and Twitter, the The ministry did not say when supplies of
ministry said the non-binding accord covered oil products from Niger might commence,
the transportation and storage of oil products. however.
Talks on this subject have been ongoing for four Nigeria, although it is Africa’s biggest oil pro-
months between Nigeria’s state-owned NNPC ducer, relies mostly on imports of fuel to meet its
and its counterpart in Niger, SONIDEP. demand. This is because its own four state-run
Niger’s 20,000 barrel per day (bpd) Soraz refineries are in a state of disrepair and cannot
refinery is situated in Zinder, some 260 km from operate at profit. They have been closed down
the Nigerian border. According to the ministry, and authorities say they will not re-open until
Niger’s domestic fuel demand is only 5,000 bpd, they have undergone extensive modernisation.
leaving a surplus of 15,000 bpd of capacity avail- NNPC recently extended an oil-for-fuels
able to provide exports. swap scheme for three years until 2023. The
Nigerian Petroleum Minister Timipre Sylva agreement is with 14 trading companies and
described the MoU as a “major step forward” for refiners on gasoline supplies in exchange for
the two countries. crude oil. Nigeria is also awaiting the launch of
“Niger Republic has some excess prod- a 650,000 bpd refinery in Lekki in 2022, being
ucts which need to be evaluated. Nigeria has developed by private conglomerate Dangote. ™

P12 www. NEWSBASE .com Week 47 25•November•2020