Nigeria to Reduce Oil Sector’s Contracting Cycle

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Hopes are high in the oil and gas sector, and indeed the citizenry at large as the Nigerian National Petroleum Company Limited (NNPCL) and Nigerian Content Development & Monitoring Board (NCDMB), signed a Memorandum of Understanding with International oil companies (IOCs) to reduce the contracting cycle to 180 days (about six months).

Prior to this time, a contract cycle in the oil and gas sector takes about 10 months or more. The extremely long cycle, which is also a major contributor to high unit cost of production per barrel of crude oil in the country, is usually induced by bureaucracy and unnecessary rules and regulations.

In a statement, NNPCL described the MoU as a demonstration of commitment to the efficiency mandate contained in the Petroleum Industry Act (PIA), which is basically attached to developing an industry framework for optimised contracting cycle.

An optimised contracting cycle is expected to make business easy, reduce cost, and drive efficiency. Consequently, this will translate to production growth, increased revenues and improved profitability.

Key benefit of the framework in the MoU is reducing the contracting cycle for open competitive tender, selective tender, and single sourcing tender to 180, 178, and 128 working days respectively, as opposed to the current best effort performance of 327, 333, and 185 working days.

NNPCL’s Group Chief Executive Officer, Mele Kyari, said the agreement indicates exciting times for the nation’s oil and gas sector, and stands as a bold testimony that the firm is diving into a future of hope, productivity and success.

Kyari, who was represented by Executive Vice President (Upstream), Oritsemeyiwa Eyesan, said as the bedrock of Nigeria’s economy, there is the need for the oil and gas sector to get the contracting process right, to boost the economy.

The IOCs, represented by the MDs/Country Chairs of Shell, ExxonMobil, Chevron, TotalEnergies and ENI, all pledged their commitment and support in the implementation of the MoU for the benefit of all parties.

The framework is in line with the Nigerian Upstream Cost Optimisation Programme and the President’s directive for NNPCL and NCDMB to engage the petroleum industry in order to improve their performance, as well as the key mandates of NNPCL under the PIA’s Article 53 (7), which empowers it to operate as a profitable and efficient commercial entity.

 

 

 

 

 

 

 

 

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