Abuja - International Oil Companies (IOCs) has said that the rising operational cost was threatening the growth of the Nigerian petroleum industry.
The IOCs made this known at the ongoing 2014 Nigerian Oil and Gas Conference in Abuja.
The group expressed the fear that the rising cost of production might adversely affect the sector’s growth.
The Chairman ExxonMobil Companies, Mark Ward, noted that the challenges of cost were necessitated by aging infrastructure, crude theft and difficult contracting process.
Ward, who is ExxonMobil Managing Director, said facilities that were used in the early days of oil discovery in Nigeria were still being used in the sector.
He said this was a serious challenge militating against the sector.
The Managing Director of Shell Petroleum Development Company, Mutiu Sunmonu, said that issues of cost inefficiency were capable of killing the oil industry.
Sunmonu noted with concern that cost inefficiency would also make it impossible for both government and stakeholders to achieve their aims for the sector.
According to him, the major drivers of costs are delay in the contracting process, the security situation and the challenge of funding.
The Chief Executive Officer/Managing Director, Midwestern Oil and Gas, Adams Okoene, expressed regrets on the high tax regime in the sector and the issue of limited assets.
Victor Briggs, Managing Director, Nigerian Petroleum Development Company (NPDC), who spoke on behalf of the Independent, Small or Marginal Field Operators, said the ability of small producers were constrained.
Briggs said the small producer ability to drive sustained growth in the sector was constrained by limited assets, inadequate technical and financial resources.
All these factors, according to Group Managing Director, Access Bank Plc., Herbert Wigwe, were responsible for the inability of the oil companies to get support from banks.
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