NNPC chief explains factors behind Nigeria’s high cost of crude production

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Chief Operating Officer (COO), Ventures and Business Development of the NNPC, Mr. Roland Ewubare, Friday, disclosed that pipeline vandalism, crude oil theft, among others, were the major contributors to the high cost of crude oil production in Nigeria.

In a statement by the NNPC in Abuja, Ewubare, however, noted that NNPC was taking measures to bring down cost of crude oil production to $10 per barrel or below, adding that the corporation was looking very closely at such variable as logistics, security and transportation with a view to achieving the aim.

He disclosed that much had been done over the years in the area of reducing contracting cycle which used to be a major factor responsible for high cost of production, stressing that the National Petroleum Investment Management Services (NAPIMS) achieved a six-month contracting cycle under him as Group General Manager.

Also, amidst speculations of non-compliance by some countries with the production cuts agreed upon by the Organisation of the Petroleum Exporting Countries (OPEC) and its non-member allies, Mr. Ewubare affirmed that Nigeria was in full compliance with the agreed output cuts, saying reports including Nigeria on the list of non-compliant countries were not true.

Mr. Ewubare explained that though Nigeria’s total production capacity was 2.3million barrels per day (mbpd), it was currently producing only about 1.4mbpd in compliance with the OPEC+ production quota, stressing that what makes up the little extra over the 1.4mbpd figure being bandied around for Nigeria was condensate which is usually not computed as part of production in OPEC quota.

He said, “There is some confusion in the market around the parameters for the production cuts. Nigeria has a full production capacity of about 2.3mbpd. We are currently producing between 1.6 and 1.7mbpd. Our OPEC quota as a result of the cuts is about 1.4mbpd.

You and I know that condensate is not included in the computation of the cut numbers. So what we have is 1.4mbpd of crude oil.
The little you see above 1.4mbpd is made up of condensate which does not count as part of the basis for assessing our OPEC quota.”

Furthermore, the NNPC also alerted Nigerians to the existence of low grade and contaminated Automotive Gasoline Oil (AGO) otherwise called, diesel offered at discounted prices in some parts of the country.

In a statement in Abuja, Managing Director of NNPC Retail Limited, Sir Billy Okoye, advised motorists to be wary of the off-spec products because of the danger they pose.

Okoye stated that the warning became necessary because the low grade, contaminated diesel is harmful to machines and environment, explaining that NNPC Retail Limited as a market leader considered it incumbent upon itself to alert the public on the subject.

He assured consumers that NNPC Retail Limited deals only in premium, high-quality products in the interest of Nigerian motorists and users, urging consumers to patronize the company’s stations where the quality of their products is assured.

He explained that as a deregulated product, diesel is also imported by other major and independent marketers in the country.

In another development, Group Managing Director of the NNPC, Mallam Mele Kyari, expressed the determination of the corporation to adhere to sustainable environment practices in all its operations to safeguard biodiversity in the country.

In a keynote address as part of activities to commemorate the 2020 World Environment Day celebration with the theme ‘Biodiversity’.

Kyari said that the corporation would continue to be guided by sound environmental policies and standards so that it does not harm the environment and the communities of creatures within its sphere of operations.

He said, “NNPC’s firm position on sustainable environmental practice is today reignited by the theme of the 2020 World Environment Day, which seeks to raise further awareness on conservation of Biodiversity.

Biodiversity has remained the single most important factor that enables all living creatures to depend on the mutual services of one another in order to ensure survival, a balanced ecosystem and the sustainability of our planet.”

He explained that the emergence of pandemics such as the Novel Coronavirus, otherwise known as COVID-19, a virus that was said to be common to Asian bats, had provided greater insights on how biodiversity equilibrium can shift, making it easier for diseases to pass from animals to people.

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