The Vice-President, Prof. Yemi Osinbajo, has said the oil production cut deal by the Organisation of the Petroleum Exporting Countries and its allies have caused a lower revenue generation for the Federal Government.
Osinbajo said on Tuesday that the Ministry of Petroleum Resources had a mandate to drastically reduce the unit cost of crude oil production in the country in order to increase government revenue.
“It is imperative that in our current era of scarce resources, we should aim at a unit cost of production in single digit. Concerted efforts should be brought to bear to achieve and sustain this,” he said at the 38th Annual International Conference and Exhibition of the Nigerian Association of Petroleum Explorationists.
The Vice-President, who was represented by the Minister of State for Petroleum Resources, Timipre Sylva, said the collapse in crude oil demand due to the COVID-19 pandemic caused the recent sudden slump in oil prices.
“The low price and OPEC+ crude oil production curtailment have largely resulted in lower revenue generation for the government,” he said.
Osinbajo expressed confidence that the country would achieve the desired goal of finding more hydrocarbon deposits in the Nigerian basins, notwithstanding the curtailment in production.
He said, “We have the assurance that production curtailment will soon be over as the world economy improves.
“In order to grow our reserves, we have proposed fiscal incentives that will attract the investments in our basins in the Petroleum Industry Bill.
“In addition, the fiscal provision for gas business will be one of the most attractive in Africa.”
Osinbajo said the increased level of uncertainty about oil and gas demands and the emerging technologies in alternative energy had become important elements in making decisions on optimal exploitation of petroleum resources.
Osibanjo continued his statement saying, “This is more critical now that abundant hydrocarbons are being discovered in the most unconventional geological basins of the world.
“In the past few months, we have faced challenges resulting in a sudden slump in crude oil price, caused by collapse in demand due to COVID-19 pandemic.”
According to the statement, another key mandate of the petroleum ministry is to ensure the growth of the country’s reserves base to at least 40 billion barrels of crude as well as the production capacity to three million barrels of crude per day.
Osinbajo said, “Therefore, opportunities abound for geoscientists, engineers and numerous other service providers in the shortest time to come.
“However, in order to significantly grow our hydrocarbon reserves, we need to invest in research and development so as to support the industry.”
He added that there was a need for effective synergy and collaboration between various policymakers and academic institutions, professional bodies, oil and gas industry players and the research and development centres to come up with innovative ideas and technologies for cost-effective exploratory and drilling activities.