The Nigerian National Petroleum Corporation (NNPC) said it has directed all its partners and suppliers to bring down their cost to between 30 and 40 per cent to ensure production efficiency.
NNPC’s Group Managing Director, Malam Melem Kyari, made the disclosure when he featured as a guest on a live Television programme on Thursday.
He said the corporation had resolved to cut down its capital expenditure and to ensure it achieved the crude oil production cost reduction of 10 dollars per barrel.
“Our target is to bring down the cost to $10 by the end of 2021. We have insisted on making sure that our partners and all our suppliers cut their costs to at least 30 to 40 percent and that will significantly bring down our costs. It’s very realistic and we are realising that,” he said.
He noted that the target of $10 per barrel by 2021 will help the country to remain competitive in the global market.
“If you can’t do this, you walk away, this is not a business of subsidies,” he noted.
Kyari assured the public that the corporation would not witness any job loss to the target, saying, “we will escape this year without job cuts in NNPC”.
“We are reviewing other heavy cost areas that can bring our cost to normality. But I know also that in terms of our partners, many of them are looking at a situation whereby job cuts will be unavoidable.
“But what is informing that much more than the cost, is actually the issue of efficiency that we have seen in the last couple of years,” he said.
On Crude oil sales discount, he said the NNPC had set July as the deadline to end the regime, adding that the corporation was looking at achieving the target either by June 30, or latest by July.
Kyari noted that if oil price settled at the current 42 dollars, it was still till a good business for NNPC and the country.
The NNPC boss said though Nigeria did not fully comply with a pact by oil producers to rein in output to balance markets, it would make additional cuts to make up for the lapses by mid-July.
On whether the NNPC would continue offering discounts on crude oil as the price recovers, Kyari said, “Absolutely not, discount will go away, definitely within the shortest period of time.
“As you know, what we did in the last two months was to close that gap much shorter than what it was, and by the end of either June or July we will see a situation where we can take out that discount because it’s no longer necessary.”
He further said the country recorded marginal under-compliance of less than 100,000 barrels per day on the OPEC output cut.
“The current numbers in the last 10 to 15 days indicated that the country is on over-compliance by position. So, definitely by the end of June, we will see full compliance from Nigeria and in the worst-case scenario maybe half of July, otherwise we are in position,” he said.
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