Financial Energy Review
……… Innovation key in oil industry – Prof. Iledare……….
Technology New Business Strategy to Reduce Cost of Crude Production – FG
The Federal Ministry of Petroleum Resources has said that technology has now become the new business strategy in reducing cost in the oil industry.
The Permanent Secretary in the Ministry, Mr Bitrus Nabasu said that this strategy is being deployed by the federal government to reduce cost of crude oil production in the industry.
According to Nabasu the federal government plans to use technology to reduce the unit cost of crude oil production in Nigeria to $10 per barrel by December, 2021.
The Permanent Secretary, made this remark at the forum titled ‘Data to Barrel’ on Monday, at the ongoing 2021 Nigeria International Petroleum Summit (NIPS) in Abuja.
“Therefore, digital technology should be placed at the core of the business strategy in the industry,
“As the demand for energy increases at an astronomical rate, the quest for deployment of innovation and technology to keep pace with the demand increases.
“The oil and gas industry utilises these innovations and trends to increase the efficiency of operations and reduce costs.
“Most oil and gas companies overrun in cost and time. The use of digital technology can help companies manage over-spending and operations, meeting deadlines and ultimately increasing overall productivity” Nabasu said.
According to him, with the uncertainty triggered by the COVID-19 pandemic, the current objective of the oil and gas industry is maintaining sustainable profitability.
He said some of the digital technologies and innovations that had helped in this regard include Artificial Intelligence, Big Data and Analytics, Robotics and Automation, 3D Modelling, Cloud Computing, Blockchain technology, amongst others.
“These technologies do not come cheap. No doubt, there are huge costs involved in the deployment of innovation, but those companies that make it a priority reap the benefits.
“According to a research by McKinsey, effective use of digital technologies in the oil and gas sector could lead to reducing capital expenditures by up to 20 per cent and operating costs in the upstream by three to five per cent.
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Meanwhile, Mrs Betty Ugona, Chief Innovation Officer, Research, Technology and Innovation Division, Nigerian National Petroleum Corporation (NNPC), said digitalisation was one of the NNPC strategies to curb high cost of operations.
Ugona said the division was set up to provide research support to the NNPC following the impact of the COVID-19 pandemic on crude oil production and how best to overcome the challenges.
Also Prof Wumi Iledare, Regional Director, Africa Society of Petroleum Engineers, said that innovation in the Petroleum industry is key and should be a dual task system not a double task system. According him a dual task system is to apply incentive where it is needed not incentive due to efforts base incentive system.
“You cannot be doing what you are doing over the years and expect different result and that is why innovation is very important in the industry and for you to move forward you have to think outside the box”
According to him the National Assembly move to ensure a single regulator is commendable especially in a society with prebendalistic tendency and llimited capacity. He said there is therefore the need to take risk that will give reward.
On his part, Mr Michael Zhaung, Managing Director, Hauwei Nigeria, said Hauwei was committed to digitalisation of the oil and gas industry in Nigeria.
He said Hauwei would continue to partner with oil and gas companies in Nigeria to provide real time monitoring of oil and gas infrastructure in order to reduce vandalism and oil theft.
