- Reduce Crude Production Cost, Total Urges Oil Producers
Total Exploration and Production Nigeria Limited has charged producers of crude oil to work towards cutting down on the cost of producing a barrel of crude in order to effectively manage the impact of the global downturn on the sector.
The Managing Director/Chief Executive, Total E&P Nigeria, Nicolas Terraz, said crude producers should learn to operate with a lean budget.
He noted that his firm had adopted measures which had helped the international oil companies to optimise the barrels of crude they produced.
Terraz, who doubles as the Country Chair for Total in Nigeria, disclosed this at a panel session on ‘Growth outlook and strategies for staying competitive after a global downturn,’ during the ongoing Nigeria International Petroleum Summit, holding in Abuja.
When asked what his firm and other IOCs would have done differently considering the downturn in the sector, the Total boss replied, “We could have worked differently. We should have worked in a lean manner and kept looking at operational efficiency. We must always optimise barrels to lower cost per barrel. When you reduce cost, it means less expenditure, less projects.
“We can do more in terms of sharing amongst operators, that is, more synergies. But that also means you have to give up some of your autonomy. Maintaining investment capacity is important for the industry. With the downturn, we had many companies not investing but it’s not the case for Total.”
On strategies for the future, Terraz stated that oil firms should use technology, noting that Total invested in Smart Room, adding that “this is an investment that saves cost and gives us more operational efficiency.”
He said oil companies must continue to work on reducing cost as the future was not just about cost reduction but about having a cost culture to remain cost-efficient.
Explaining what cost efficiency meant, Terraz said it was about renegotiating a firm’s cost with contractors.
He said, “It does not mean we want to squeeze the contractors but rather that we want to pay the right price for goods and services. There is no reason why oil companies should pay a different price from other sectors for the same goods or services.
“Cost efficiency is also about reducing unnecessary waste or processes; this saves time and money. We need to focus on doing just what we need to do. In all of this cost reduction, Total did not lose its workers and they are our greatest assets.”
He added, “This is because we believe that the downturn is a cycle and things will improve again. We spent a lot of time cutting cost. Now, we spend the same amount of time maintaining a cost-efficient culture.”
