COVER STORY “This ceremony of the official launch of NOGEC – an integrated resource complex to drive Safety, Value and Cost efficiency in the Industry – is yet another milestone in the development of the oil and gas sector and the realisation of greater value for all stakeholders,” Buhari said while speaking at the inauguration of the centre. While charging stakeholders in the industry to take full advantage of the centre, he said, “I therefore charge you all to rededicate yourselves to national duty and take full advantage of this Excellence Centre to meet the challenges confronting industry. On our part, we will spare no effort to ensure that every Nigerian gets the maximum benefit from the huge natural resources. “We will continue to leverage oil and gas for development and pursue our economic diversification drive across all sectors. I urge all industry practitioners and stakeholders to join me in this task of nation building to realise the abundant opportunities in our country.” Also speaking at the inauguration, the Minister of State for Petroleum Resources, Chief Sylva, said that
of the Centre designed to enhance safety management, emergency preparedness & response and routine transportation for bed space management. SeRAS will therefore drive cost reduction and improve operational efficiency across the Industry. “Conservatively, it is projected that upon full implementation of SeRAS, the annual industry expenditure for offshore and remote locations flight logistics and emergency response will reduce by 50 per cent – a significant gain towards our target reduction of cost-per-barrel across our operations,” he said. On his part, the Director of DPR, Engr. Sarki Auwalu, said, “Today, we have concluded the framework and implementation modalities for successful take-off of these Programmes within the National Oil and Gas Excellence Centre due for imminent commissioning. “We have no doubt that the industry now has the resource and platform to interact, cooperate and collaborate on salient industry issues that remain impediments to cost reduction, safe operations and optimum value optimisation”.
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NOGEC will help the country to cut operations cost in both offshore and remote locations by 50 per cent, adding that the projected 50 per cent reduction will also lead to the realization of the $10 per barrel oil production cost target.
“Search, Rescue and Surveillance (SeRAS) is a flagship programme
The importance of community engagement cannot be
Majorwaves Energy Report
But speaking with journalists after the end of the two-day public hearing on the proposed bill by the Senate panel in January, Chief Sylva said that 2.5 percent is fair enough. The Punch quoted him as saying,
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“The 2.5 per cent as proposed in the bill is fair and of course, I speak as a member of the host communities myself.
“Before now, you had a provision of 10 per cent of profit for the host communities but we discovered that if the oil firms do not declare it, host communities won’t have anything.
PIB, Community Engagement and Cost Optimization
FEBRUARY 2021, Vol 4 No 2
The leaders of the oil rich communities under the aegis of the Host Communities of Nigeria Producing Oil and Gas (HOSTCOMS), in January at a public hearing, openly rejected the 2.5 per cent being proposed for them in the PIB, being considered by the joint Senate Committee on Petroleum Resources, (Downstream, Upstream and Gas), insisting that it is 10 percent or nothing.
“If you have to look at it properly, you will see that 10 per cent in profit is different from 10 per cent of the OPEX (operating expenditure).
“Let me take a few moments to highlight the main elements of each of these centres to underscore its role in driving cost reduction, increasing production and enhance value for the Industry.
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overemphasized, if the country must achieve its $10 per barrel production cost target. This is the reason a comprehensive effort must be made to ensure that the overall best interests of the host communities are enshrined in the proposed Petroleum Industry Bill (PIB), currently before the National Assembly.
Sarki Auwalu
“But in this case, it is 2.5 per cent of the operating expenditure. So, at the end of the year we will calculate the operating cost and take the 2.5 per cent of that cost to the budget of the next year.
