FG hopeful of sustained oil production amidst low prices
The Federal Government and operators in the oil and gas sector have announced plans to deepen cost-cutting measures in order to sustain oil production, earn some revenues and be competitive in the international market.
With oil prices dropping to historic low amid the coronavirus pandemic, the Federal Government hopes to sustain production in order to sustain the economy.
Already, motivation for continued oil production has continued to drop as oil prices remain low despite the OPEC+ production cut deal, even as available oil storage capacity around the world runs thin due to drop in global demand amid lockdowns and travel restrictions in many countries.
At $22.28 for Brent and $14.94 for Bonny Light as at 3 pm local time, margins have dropped significantly with countries with refining capacity taking advantage of the glut to stock and buffer consumption.
The Group Managing Director of the Corporation, Malam Mele Kyari, said the industry remains resilient and would continue to adjust to situations as they arise.
Speaking during the donation of medical consumables and ambulances to Lagos and other South-West states by the oil and gas industry, as part of the industry’s contributions to combat the pandemic, Kyari said: “This is a resilient industry that adjusts to every situation. One of the things the industry does is to cut down costs and increase production. But if we increase production today, there is nowhere to take it; so, we need to reduce supply so that the books can be balanced by maintaining basic services, shift budgets forward and ultimately avoid getting grounded.
“We are engaging our partners to make sure that we survive this pandemic. This country depends so much on the oil and gas industry and it is our duty to make sure that operations continue, revenues continue to flow and we are able to keep the country going”.
Indeed, the Independent Petroleum Producers Group (IPPG) in partnership with NNPC made an initial donation of 5,000 protective suits and goggles /eyewear; 20,000 -FFP2 / N95 face masks, 500,000 protective surgical face masks and six brand new and fully-kitted Toyota Hiace Ambulances to support the national effort at mitigating the impact and curbing the spread of COVID-19 in Nigeria.
On its part, the Independent Petroleum Producers Group (IPPG), an association of indigenous Exploration and Production (E&P) companies, through its Chairman, Ademola Adeyemi-Bero, said: “It is important to support this laudable NNPC-led intervention which ensures the industry proactively and sustainably supports all those affected by this pandemic from patients to our first responders, frontline medics and caregivers, and every other impacted person.
“As a nation, we can only effectively address this pandemic through a widespread and concerted effort by all stakeholders. IPPG is committed to working collaboratively to tackle this pandemic and believes in the resilience of the nation which will overcome this challenge”.
The Minister of State for Petroleum, Timipre Sylva stated that operators in the sector understood that the nation needs to be healthy to remain operational or profitable and that is why the oil companies have responded this way.
According to him, this is the beginning of our contributions to the industry.
“The intervention initiative is in alignment with the on-going Federal Government’s efforts and in collaboration with the NCDC to curb the pandemic.
“It is aimed at supporting our national healthcare delivery facilities and cover three key thematic areas,” he said.
The three thematic areas he said are the provision of medical consumables, deployment of logistics and in-patient support system and delivery of medical infrastructure.
Lagos State Governor, Babajide Sanwo-Olu commended the initiative, assuring operators in the oil and gas sector that the donations would be delivered to the respective State governments for immediate utilisation.
According to him, these are difficult times for everyone and people have to cooperate to achieve the set goals.
On rise in number of cases recorded in the state, he said: “We have ramped up testing and that is why we are seeing the spike in the numbers of infected people. We are literally knocking on doors in order to flatten the curve. That is why everyone needs to play their roles in obeying the rules and not just see it as politics. The use of facemask is to check transmission.
“We have planned for the worst scenario while hoping for the best”.