Why NNPC Continues Oil Production Amidst Glut – Kyari
For the danger of losing market share when prices rebound, the Nigerian National Petroleum Corporation (NNPC) has said it would not shut down production as a result of the glut in the international oil market.
The Group Managing Director of NNPC, Mele Kyari, disclosed this during a virtual engagement with editors on Wednesday.
According to him, the Corporation had succeeded in sustaining operations despite disruptions and slow economic activities worldwide.
Adding that the company ensures its operations are sustained across the business value chain, with employees working remotely and supporting the delivery of the corporation’s business objectives.
Speaking on the high cost of oil production in the country, Kyari said that efforts are geared towards ensuring that production cost does not exceed $10 per barrel.
He hinted that NNPC was embarking on more operational and fiscal discipline in its activities as a result of the economic downturn created by the twin impact of COVID-19 pandemic and the slump in oil prices.
Kyari, however, noted that NNPC was not immune to the present realities in the international oil market. He lamented that the country’s revenue flow had been greatly impacted by the fall in oil price, adding it had affected the Corporation’s liquidity position and the anticipated remittances to the federation account.
“NNPC has, however, maintained steady production in order not to lose market share in the event of crude oil price recovery.
“Instead, NNPC has taken aggressive capital allocation to prioritise low-cost oil production and additional measures to ensure cost discipline across, including renegotiation down of contracts and other business obligations, thus saving 40 per cent of proposed budget and cost,” he said.
On inland basin exploration, Kyari disclosed that NNPC had sustained exploration activities in the Benue trough (Gongola, Benue, Nasarawa), Chad, Bida, Sokoto as well as Anambra basins.
“Due to the success of the inland basin exploration campaign in the Gongola basin and the recent discovery of large volumes of hydrocarbons in the area straddling Gombe and Bauchi states (Kolmani Area), NNPC has planned to deploy more resources to ensure the monetisation of the resources and stimulate economic activities to supplement national growth aspirations,” the GMD said.
Providing an update on the ongoing NNPC refineries rehabilitation, Kyari said Port Harcourt refinery had been awarded to Tecnimont SPA, Italy (TCM) – the representative of JGC, the Original Refinery Builders (ORB), which he said has completed inspection and integrity tests on the facility.
For Warri refinery, NNPC boss noted that the corporation has appointed NETCO/KBR as Owners Engineer (OE) for PHRC and WRPC rehabilitation, while activities at Kaduna Refinery Phase 1 inspection would commence in quarter three of 2020.