The Nigerian National Petroleum Corporation has estimated global losses from exploration and production activities due to slowing demand for crude oil amid the COVID-19 pandemic will hit about $1 trillion by the end of 2020.
Group Managing Director of the corporation, Mallam Mele Kyari, who stated this on Tuesday at the Nigerian Association of Petroleum Explorationists (NAPE) 2020 Conference, also reiterated the plan of the NNPC to reduce production cost per barrel to $10 by 2021.
The theme of the conference held in Lagos was “Accelerating Growth in Nigeria’s Hydrocarbon Reserves: Emerging Concepts, Challenges and Opportunities.”
He said the NNPC had slashed its cost per unit to between 20 per cent and 30 per cent and would reach the projected target next year.
He said, “We are in challenging times. What COVID-19 did to the oil industry is monumental. It has done a lot of collateral damage to the rest of the industry, entertainment and everything you can think off.
“Of course, the collateral cost to the industry we expect is about $1tn of loss for E&P across the globe.
“There’s an extreme decline in demand for oil and of course other losses through the year which is fatal for the business.
“But businesses must adjust and do things differently. We have pulled down cost and increased revenue and we are focusing more on reducing cost and optimising costs where we are not able to cut costs.
“We are investing in gas because we have seen the resilience of gas and that has taught us that gas will be the future of transition fuel and a great player in the future scenario. We are a gas country with over 600tcf with proven reserves of 203 trillion CF. We have done very little on that. The PIB will be the solution to this.”
Kyari said the only way to survive the difficult situation was to cut or optimise production costs and increase revenue.
Vice President, Prof. Yemi Osinbajo, who also attended the event, said the Federal Government was targeting the growth of the country’s crude oil reserves, currently at about 36 billion barrels to 40 billion and achieve a daily production of three million barrels.
Kyari, in his virtual presentation from Abuja, explained that with over 203 trillion cubic feet of gas, the Petroleum Industry Bill (PIB) when passed into law, would unlock the huge potential in the country.
According to him, without a clear fiscal environment and incentives in place, no one will invest in the sector, adding that by the time the PIB is ready next year, there will be renewed vigour in the industry, especially on the gas side.
He stated that despite the conversations surrounding the extinction of hydrocarbons, crude oil will continue to be relevant in the next 20 to 40 years.
He added that only very efficient companies producing at cheapest cost and getting to the market early would survive.
Kyari expressed delight at the discovery of oil in the frontier basin, particularly in the Benue trough.
He said it would significantly change the dynamics of production in the country, including the expansion of the country’s reserves.
He said, “Times are tough but the opportunities are all there. As a company, we have a target in the upstream and we know that $10 is possible in the industry. A lot is going on in terms of sharing resources, reducing contracting circle etc. We have seen a cost reduction of 20 to 30 per cent and overall at the end of 2021, we will see the $10 unit production cost.
“There are areas where it’s being done for less than $10 and unless we do this, we will not be competitive. The advantage we have is the quality of oil we have and we are one of the most extreme area in terms of distribution, so we have to pull the cost down, otherwise, we will produce oil and not find anyone to buy because you cannot cover the cost ultimately.”
Osinbajo, represented by the Minister of State, Petroleum, Chief Timipre Sylva, explained that though renewable energy remained the future of energy transition, hydrocarbons would remain the dominant source of energy in the immediate future.
He expressed optimism that a single-digit unit cost of production was achievable, provided the entire industry could work together to achieve the set target.
He said, “There’s no gainsaying that the growth of some countries depends on energy availability and utilisation, especially on crude oil and increasingly on natural gas.
“Renewable energy is becoming a cheaper form of energy and response to climate and reduced dependence on hydrocarbons over the next century seems to be inevitable. That notwithstanding, technology and discussions to date suggest that hydrocarbons will remain the dominant source of energy in the immediate future.
“The increased level of uncertainty in oil and gas demand and the emerging technologies on alternative energy have become important elements in making decisions on optimal exploitation of petroleum resources.
“This is more critical now that abundance of hydrocarbons is being discovered in the most unconventional places of the world. I suggest that our discussion should include but not limited to provision of secure energy supplies.”
The vice president stated that the OPEC production curtailments had resulted in lower revenue for the government, adding that it is now imperative for Nigeria to achieve a single-digit cost of production.
“Another key mandate is the growth of the country’s reserves to 40 billion barrels of crude oil as well as the production capacity of three million barrels of crude oil per day. We are fully committed to this mandate, notwithstanding the curtailment.
“We have the assurance that the curtailment will soon be over as the world economy improves. To grow our reserves, we have proposed fiscal incentives that will attract investments in the PIB,” he stated.
FG establishing oxygen plants in 36 states – NEC
The National Economic Council (NEC) says the Ministry of Health is establishing oxygen plants across the 36 states of the federation.
Ebonyi State Governor David Umahi made this known to State House correspondents after a virtual NEC meeting on Friday presided over by Vice President Yemi Osinbajo.
Umahi said that Governor Ifeanyi Okowa of Delta, who chaired the NEC Ad hoc committee interfacing with the Presidential Task Force (PTF) on COVID-19 to ease the lockdown of the economy, presented a report to the council.
“The Federal Ministry of Health is establishing oxygen plants across the 36 states in the country, but currently six states have been provided with oxygen cylinders so far.
“The Federal Government has paid for 40 million doses of COVID-19 vaccines coming in batches and therefore a considerable amount of the vaccines will come into the country between now and January 2022. Nigeria is now classified among the 50 countries in the green zones.”
Umahi said that NEC also received states’ performance report on COVID-19 from the National Centre for Disease Control (NCDC).
He said that the council was also updated on the global situation of COVID-19.
He said, “Over 237 million confirmed cases and over 4.8 million deaths due to COVID-19. There are now over 6.3 billion vaccine doses administered. Nigeria is still in the first wave of vaccination and vaccination tools will improve as the country receives additional vaccines. COVID-19 cases have declined by 7.5 per cent over the last week.”
Umahi said that states were urged to continue to push testing activities in order to detect new cases before the situation worsened.
According to him, an update on travel restrictions on certain countries expected to be announced soon by the Federal Government.
The governor said that the council also received an update on the situation regarding Cholera outbreak.
“Current Cholera situation in the country; suspected number of cases is 88,704. Number of states is 31 and the FCT. Number of deaths is 3,208.
“Multi-sectoral emergency operation centres activated at level 2 continues to coordinate the national response,” he said.
He listed the challenges to include difficulty in accessing some communities due to insecurity, open defecation and lack of potable drinking water.
Umahi said other challenges were lack of basic health primary healthcare infrastructure, inadequate health facility and cholera commodities for case management.
Umahi said that NEC commended the insightful presentations and congratulated the outgoing Director-General of NCDC, Dr Chikwe Ihekweazu, on his new appointment at the WHO and also welcomed the incoming Director-General, Dr Ifedayo Morayo Adetifa.
Bakare meets with Buhari, opposes clamour for power rotation
Founder of Citadel Global Community Church, Tunde Bakare, says the region to produce the president of Nigeria should not be an issue.
He stated this in Abuja on Friday during an interaction with reporters at the presidential villa after meeting President Muhammadu Buhari, noting that Nigerians are only bothered about a leader that would ensure the prosperity of the country.
The pastor said the “immaturity” of the citizens is responsible for “making us say power must either be in the North or be in the South, instead of looking for the best.
“Listen to me, if where the President comes from will make the place he has come from to be better, the northern part of Nigeria should be richest and the most progressive and the most developed because out of 61 years, the North has produced either the President or heads of state for 40 to 41 years and yet, see the retrogression in the North.
“If it’s from the South, why should a person like President Obasanjo freeze and seize the account of Lagos State in his own tenure? If it’s from South-South or South-East, why couldn’t President Jonathan use all his powers to develop South-South/South-East?
“If there are agreements between politicians on rotation, a bargain is a bargain. That is between them. But as far as this country is concerned, what we need at this stage is a man who can drive us to the Eldorado.”
The pastor commended the national assembly for empowering the Independent National Electoral Commission (INEC) to determine the mode of transmitting election results.
“Perhaps one of the best things the present national assembly has done, especially the senate, because, with that, Nigerians can vote and then results can be transmitted so easily,” he said.
“Not only that, part of the state of the nation address that I did on October 10, I emphasised how Nigeria youth, especially undergraduates, are disenfranchised in our country.”
FG declares Tuesday Oct 19 Eid-il-Maulud holiday
The Federal Government has declared Tuesday October 19 a public holiday to mark the Islamic festival of Eid-il-Maulud in “commemoration of the birth of the Holy Prophet Muhammad (Peace be upon him).”
Minister of Interior, Rauf Aregbesola, made the declaration on behalf of the Federal Government, in a statement signed by the Permanent Secretary in the ministry, Dr Shuaib Belgore.
Aregbesola congratulated the Muslim faithful both at home and in the diaspora for witnessing this year’s occasion.
He urged all Nigerians to imbibe the spirit of love, patience and perseverance which he said “are the virtues of the Holy Prophet Muhammad (peace be upon him), adding that doing so would guarantee peace and security in the country.”
The statement added, “Ogbeni Aregbesola enjoined Nigerians, particularly Muslims, to refrain from violence, lawlessness and other acts of criminality. As the indisputable leader of our race, we must show responsible leadership in Africa.
“While calling for a stop to all divisive tendencies across the country, the minister urges all Nigerians and the youth in particular, to embrace the virtues of hard work and peaceful disposition to fellow humans, irrespective of faith, ideology, social class and ethnicity and cooperate with President Muhammadu Buhari’s led-Administration in its effort to build a progressive and enviable nation that all citizens would be proud of.”
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