The Nigeria Society of Petroleum Engineers (NSPE) yesterday decried long contracting circle of 18 months in the nation’s oil industry and urged the Federal Government to compel the Nigerian National Petroleum Corporation and its regulatory agencies to reduce it to between six and three months.
A contracting cycle is the duration between the initiation of the bidding process through registration of contractors and actual award of contracts for projects executed in the oil and gas industry. Speaking in Lagos yesterday on the forthcoming NSPE national conference and exhibition, Nigeria Council chairman, Mr. Chikezie Nwosu, said despite the efforts by the Minister of State for Petroleum Resources, Ibe Kachikwu, contracting circle is still around 18 months.
“Long contracting process is a major addition to the technical cost of oil in Nigeria. Some contracts have not been approve for over 13 years with equipment and personnel laying fallow. If we can reduce the circle to between six and three months, the build-up cost on the cost of oil production will be reduced,” he said
He said industry players must unlearn the bad practices that led to high unit technical costs when the oil price hovered at $100 per barrel, adding that the Minister of State for Petroleum Resources and the Group Managing Director of the Nigerian National Petroleum Corporation are driving unit technical costs to come to the range of between $15 and $18 per barrel from $35 per barrel in the past, and the industry has already come to levels of $23/bbl.
With the theme, ‘Diversification of the Nigerian Economy: The Oil & Gas Industry as an Enabler’, Nwosu said creating the right business environment for the industry to thrive will enable the much-needed diversification.
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