The Nigerian National Petroleum Corporation (NNPC) has commenced plans to crash oil production cost to $10 per barrel.
Group Managing Director of the Corporation, Mallam Mele Kyari stated this on Thursday during a virtual engagement with some editors.
Kyari explained that the corporation had “rolled out strategies to achieve sub $10 per barrel production cost without jeopardising growth.”
He lamented that “oil price collapse below cost has led to production deferment across the world.”
The GMD said revenue flow “has been greatly impacted by fall in price of about 65 per cent, thus affecting the corporation’s liquidity position and the anticipated remittances to the Federation Account of about N1.27 trillion (April to December 2020).”
He said low demand and uncontrolled supply sent global storage to tank top with about 1 billion barrels and refinery output cut due to demand fall.
“Net back value of crude for long haul journeys to China have declined to $1.05 per barrel on the first of April 2020 due to low price and high freight cost,” Kyari added.
On the impact of COVID-19 on NNPC business, the NNPC’s helmsman said the corporation “has sustained operations despite disruptions and slowed down economic activities.
“The NNPC has activated business continuity Protocol and Connect with Partners locations to ensure operations are sustained across the business value chain.”
Kyari said employees were “working remotely, supporting the delivery of the corporations’ business objectives and ensuring revenue flow to the federation and sustaining National Energy Security.”
He maintained that the oil price rout affecting the global market has rocked the corporation’s liquidity position and anticipated remittances to the Federation of N1.27 trillion.
Kyari said oil prices “have gone down to sub $10/bbl due to the economic impact of COVID-19 and crude oil supply and demand imbalances.”
He explained that “the NNPC has maintained steady production in order not to lose market share in the event of crude price recovery.
“The NNPC has taken aggressive capital allocation to prioritize low cost oil production and additional measures to ensure cost discipline including re negotiation down of contracts and other business obligations, this saving 40 per cent of proposed budget and cost.”