Ayo Bello
President of the Nigerian Association of Petroleum Explorationists (NAPE), Mr. Johnbosco Uche, and the Association’s President-Elect, Mrs. Cecilia Olajumoke, have called for stronger industry collaboration, increased local manufacturing, and accelerated adoption of gas-powered operations to significantly cut Nigeria’s oil production costs to below $40 per barrel.
Speaking at a media parley in Lagos ahead of NAPE’s 43rd Annual International Conference and Exhibition, scheduled for next week, Uche said that the high cost of production in Nigeria’s upstream sector remains a major concern for investors and operators. He explained that the country’s high operating expenditure (OPEX) is largely driven by high transportation costs, heavy security spending, and the use of diesel-powered systems in field operations.
“When you look at what takes your OPEX that high, it has to do with your means of transporting your goods and also the amount you spend on security, which is huge,” Uche stated. “The diesel we consume also contributes significantly. But with the right innovation and collaboration, we can crash these costs.”
The Olajumoke cited the example of a Nigerian oil company that successfully reduced its transportation (barging) cost from about $65–68 per barrel to just $7 per barrel after converting its diesel-powered barges to compressed natural gas (CNG) engines.
“The game changer was that all their barges were converted from diesel to CNG,” she said. “Since CNG is gas, they now use gas to power the means of transporting their oil to the point of sale. That single move drastically reduced cost.”
The NAPE top officials noted that as Nigeria improves its security framework around pipelines and oil facilities, and with ongoing efforts to stabilize the Niger Delta, the financial burden of protecting oil infrastructure will also decline.
“If I tell you what my annual security budget is, you’ll be shocked. It’s quite high,” Uche said. “Now that we are securing our environment better and pipelines’ uptime is improving, it will help us cut down on security expenses.”
The NAPE president emphasized that collaboration among operators is central to achieving lower operational costs. According to him, sharing infrastructure, facilities, and services rather than duplicating them across companies will help operators reach single-digit OPEX levels.
“Collaboration is key,” he explained. “There’s a facility I don’t have, but I use my neighboring operator’s facility and pay a tariff. If we all do this—share existing infrastructure instead of duplicating—our costs will drop significantly.”
He also urged oil service companies to embrace cost optimization and local value creation. Uche identified the high cost of steel and other imported long-lead items used in drilling operations as another major factor inflating production expenses.
“Most of the drilling materials are made of steel and come from outside the country,” Olajumoke said. “If we can revive the Ajaokuta Steel Company and start producing our own steel, we can manufacture these materials locally. That will reduce both our OPEX and capital expenditure (CAPEX).”
She stressed that local steel production would have a multiplier effect on the entire petroleum value chain—reducing import dependence, saving foreign exchange, and fostering industrial growth.
Uche however, lamented that individual companies often duplicate spending on the same services, infrastructure, and logistics. According to him, such fragmentation contributes to Nigeria’s high unit technical cost and undermines competitiveness compared to peer oil-producing nations.
“When company A spends $800,000 on a particular service and company B does the same independently, it adds to the overall cost,” he explained. “We are preaching collaboration—joint utilization of facilities, shared logistics, and cost-sharing arrangements. That’s how we can bring the cost down.”
Uche also called for greater coordination in developing shared offshore facilities like Floating Production Storage and Offloading (FPSO) units, urging companies to explore joint production models.
“You don’t build FPSOs every day,” he said. “If different companies can produce from one facility, that collaboration will drive down the cost of production drastically.”
He added that while issues such as security, contractor pricing, and competitiveness still pose challenges, the industry can make significant progress through cooperation and innovation.
“There are still security and pricing challenges from contractors in exploration and production,” he said. “But primarily, collaboration is the key. If we go on that trajectory, not doing it alone, we can bring these costs down.”
Uche’s comments set the tone for discussions expected at NAPE’s upcoming annual conference, themed around industry innovation, cost efficiency, and sustainable energy development. The event, which attracts major industry stakeholders, policymakers, and investors, will focus on strategies to boost Nigeria’s oil and gas competitiveness amid global energy transition pressures.
He reaffirmed NAPE’s commitment to driving policies and partnerships that encourage local content development, reduce operational costs, and sustain investor confidence in Nigeria’s upstream sector.
“Our goal as NAPE is to ensure that Nigeria’s oil and gas sector remains globally competitive,” Uche concluded. “Through collaboration, local capacity, and innovation, we can achieve single-digit OPEX and position Nigeria as an attractive destination for energy investment.”