Kachikwu: Militancy, Vandalism Responsible for 54% Production Loss

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The Minister of State for Petroleum Resources, Ibe Kachikwu, has attributed the loss of 54 per cent of the nation’s daily oil production to militant attacks and pipeline vandalism in the Niger Delta.

The minister stated this in the mid-term review of the activities of the ministry between August 2015 and August 2017 through his social media platforms. Kachikwu said: “The country’s situation was worsened by the spate of militant attacks and pipeline vandalism in the Niger Delta, resulting in the country losing over 54 per cent of its daily oil production, from about 2.2 million barrels to about 1.2 million barrels.

To resolve the perennial Niger Delta crisis, he said the government adopted collaboration, intervention and partnership strategies to calm the restive community people in the region, adding that, “This has since paid off, with oil production increasing from 1.2 million bpd to 2.2-2.3 mbpd, including condensate.”

He also said that the government had to start with creating ‘NNPC’s 20 fixes’, to create initiatives around issues of costs of business, restructuring, business focus, departmental independence and low morale of staff.

He said the ‘Seven Big Wins’ initiative was to point at the direction the oil industry was to go in the next three to four years. During the period Kachikwu said the National Petroleum Policy was established, to set the medium to long-term parameters and targets for industry strategies and policies on oil resources, including oil reserves growth and utilization.

He highlighted other achievements to include: The approval of the National Gas policy, to define the strategies for harnessing and development of the country’s gas resources, elevate gas from being a subsidiary of oil, and giving it the practical expression of Nigeria as a gas territory.

On the issue of fuel queues, Kachikwu said: “Appropriate fuel pricing framework was created, which facilitated the immediate disappearance of fuel queues at filling stations across the country.

“Since then, refined petroleum products consumption has dropped from over 50 million litres per day to average of 28 million litres, creating certainty and peace in the operating environment,” he said.

On the business environment, the minister said the resolution to encourage the involvement of private investors in massive in infrastructure development has helped resolve the crisis, although he said it was still inadequate.

He identified some of those private initiates, namely the Dangote Group effort to build one of the world’s largest refineries and the development of fuel receptor terminals by MRS Petroleum. In addition, he said the National Petroleum Development Company, NPDC, was investing in growing its production capacity, from 30,000 barrels to over 200,000 barrels per day, bpd, with a projection to reach 500,000 bpd.

He said government wants to automate the licensing process, to check people going around the Department of Petroleum Resources, DPR and other regulatory agencies, while growing human capacity, through on the job training.

“How do we stop gas flaring as a global environmental concern? Our target of 2020 has been set to stop gas flaring, ten years ahead of the 2030 target set by the United Nations.

“How do we reduce business costs? Today, offshore oil production costs are in excess of $32 per barrel, while on-shore fields cost are about $23 per barrel. We must target a cost of about $15 per barrel, where most members of OPEC are at the moment.

“We must review existing operational contracts to create models that reduce costs substantially and bring more benefits to the country better than what is happening.”