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Identify cause of high production cost, PENGASSAN urges FG

By Edith Ike-Eboh

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASAN) has urged the Federal Government to identify the real cause of the high cost of crude oil production in the country.

PENGASAN President, Mr Festus Osifo, made the appeal at the inauguration of the Nigerian Upstream Cost Optimisation Programme (NUCOP), in Abuja, on Tuesday.

Osifo said that the drive to reduce the cost of crude oil production was a good initiative which the association had championed over the years.

He said that many International Oil Companies like Exxonmobil, Chevron, Total had in the past set up cost-effective initiatives team to look at the high cost of production.

“In PENGASSAN, we have asked a lot of questions that can optimise the operations over time; so, we welcome the Federal Government to the club of what we started several years ago.

“If we are reducing cost, we must look at operational efficiency, so that for every dollar we spent, we see the outcome,’’ he said.

He said that the first in the list of the minister as factors contributing to the high cost of crude production was the human resources.

This, he said, should not be so, considering how the naira had been devalued over the years.

“For us, the real cost drivers are not employee cost, but logistics and the fees we charge, among others, form the real cost drivers.

“We should also look at our laws and see how some of these cost drivers can be removed to achieve reduced cost in crude oil production,’’ Osifo said.

He also advised that security cost should be looked into in the effort to reduce cost of production in the country.

“We, in PENGASSAN, are ready to partner with government, but we should clearly define where the cost drivers are and situate them because if we do that, we believe that this project will be achieved,’’ he said.

In his remarks, the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Mr Simbi Nwabote, said that the effort to reduce the cost of crude oil production was a step in the right direction.

Nwabote said that cost reduction in operation came with pains which all the stakeholders should be ready to accept, adding that the bottom line would be to get businesses to survive.

“There is a need to sustain jobs while trying to achieve the objectives of NUCOP and this is why we need to use locally built capacity.

“Local content is panacea for cost reduction, for us at the NCDMB, we will continue to drive local content and ensure we sustain jobs for our people, ‘’ he said.

Also, the Chairman Oil Producers Trade Section in Nigeria, Mr Mike Sangster, said that NUCOP was a great initiative that should be supported by all.

Sangster commended the Nigerian government and the Group Managing Director of the Nigerian National Petroleum Corporation, Malam Mele Kyari, for the initiatives.

He said that the high cost of crude oil production had denied Nigeria so much even with its importance in Africa and the industry.

Sangster said that about 70 billion dollars was deployed to Africa for investment in the sector but only three billion dollars came to Nigeria.

He noted that there was also the need to pass the Petroleum Industry Bill and improve on the ease of doing business in the country.

This, he said, would drive the needed growth and development in the sector and in the country.

Also, President, the Nigerian Union of Petroleum and Natural Gas Workers, Mr Williams Akporeha, said that the union was in support of the initiative but called for openness in operational fundamentals.

Akporeha who corroborated the ideas of the PENGASSAN president said that there was a need to look at where cost should be optimised.

“Any policy without human face will face a lot of challenges, we must be careful with how we cut salaries,” he added (NAN)