Nigeria's foremost Online Energy News Platform

Local content will cut unit cost of crude oil production -Sylva

*Nigeria’s high production cost per barrel of crude oil, considered one of the highest in the world, is a concern to the Federal Government. In view of this challenge, the Minister of State for Petroleum Resources, Chief Timpre Sylva, has promised that the government would deepen implementation and compliance with local content to reduce the cost of producion

The Federal Government has pledged to deepen the implementation of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act to lower high crude oil production cost, the Minister of State for Petroleum Resources, Chief Timpre Sylva, has said.

He stated this during his first visit to the Nigerian Content Development and Monitoring Board’s (NCDMB) head office in Yenagoa, Bayelsa State.

He visited the Board’s new 17-storey headquarters, which is nearing completion, and other project sites.

Emphasising that the government’s primary target in the sector was to significantly reduce the unit cost of producing a barrel of crude oil, Sylva stated that “local contractors tend to be cheaper than expatriates and international contractors and that’s why we want to encourage local content and give more opportunities to local contractors. By extension we will reduce the cost of doing business in the oil and gas industry in Nigeria.

“Local Content is part of cost reduction strategy. That’s why I came here, to encourage more local participation in the activities of the industry.”

The minister also praised the NCDMB for epitomising its mandate by using an indigenous contractor to develop its new headquarters.

He described the edifice as world class and a clear demonstration of the capacity of contractors. Such superlative performance on projects would pave way for the engagement of other local contractors in the oil and gas and construction sectors, he said.

“When you have seen one contractor perform this good, you are encouraged to patronise more local contractors,” he added.

He expressed confidence that the new NCDMB structure will attract a flurry of oil industry activities to Bayelsa State, noting: “The problem we have had over the years was that the region where oil production takes place did not have proper structures to promote lots of events. That’s why you see oil and gas events going to Abuja and Lagos.

But when you have a befitting facility here, going forward, there will be a lot of oil and gas related activities in the Niger Delta.”

Sylva commended the NCDMB for the numerous achievements it had recorded in the implementation of the NOGICD Act.

He said: “I am quite impressed with what they have done in a very short time of existence. The new headquarters building is a testament to that impressive performance and of course, you have the 10 megawatts (Mw) independent power plant. It is a modular plant that can be increased up to 25Mw.”

NCDMB Executive Secretary of NCDMB, Simbi Kesiye Wabote, confirmed that local content implementation lowers the cost of crude oil production, particularly in the long run.

He listed other key elements that contribute to high crude oil production cost in Nigeria to include security and infrastructural challenges as well as protracted contracting cycle.

He noted that several Nigerian oil service companies had executed several projects at costs much lower than their international counterparts, adding that countries such as Brazil, Malaysia and Norway that had practiced local content in their oil sector for decades had long enjoyed significant cost reduction in their per barrel cost.

Wabote explained that local content serves as an opportunity cost for the Federal Government to empower its citizens and get them involved in the activities of the oil and gas industry.

He added that local content guarantees security of supply in the industry, recalling that local service companies and skilled Nigerians personnel ensured that operations of the oil and gas industry continued apace during the height of restiveness in the Niger Delta region a few years ago when most foreign companies and their staff had pulled out.

Providing details on the new NCDMB facility, NCDMB chief reiterated that it will be ready in December 2019 but relocation of staff will be in phases. He stated that the project recorded huge impact on the local community.

According to him, “when we started, we took about 50 youths from the host communities and trained them in carpentry, masonry, laying of tiles and other skills.

Today, those youths are working on the facility and because of the skills they have acquired, the contractor will take them to other projects.

“In terms of Corporate Social Responsibility, we worked with the contractor and built a town hall for the Swali community which we commissioned last year.

Many members of community also supplied sand, granite and other inputs. They have been an integral part of the construction.”

Executive Secretary also said NCDMB had developed a sustainability plan for the facility, which includes renting out some of the floors to reputable oil and gas organisations. “Currently we have two applications from operating companies,” he added.

SOURCE: TheNationNigeria