As part of the moves to increase production and prop up Federal Government’s revenue, the Nigerian National Petroleum Corporation (NNPC) has announced plans to renovate abandoned oil fields in the country.

According to the Group Managing Director of NNPC, Maikanti Baru (photo), the corporation intends to extend the borders by diversifying the production mix and terrain. He said NNPC also requires an average of $600million as joint venture (JV) cash calls every month.“We will encourage oil exploration and development in new areas, redevelop abandoned fields and ensure full utilization of existing production acreages. The incremental production will help shore up government revenue,” he said.

Baru added that looking at the low oil price, sustainable returns need to be maintained and in order to accomplish this goal, the corporation was working on economic measures that would guarantee safe and profitable operations of the assets, while also ensuring sufficient margin for both the government and investors.

“Initiatives such as service sharing for clustered assets, standardization of operating framework and contracts, resource pooling and reducing contract cycle time will be pursued. To diversify the source of government revenue and capture value across the entire value chain, we will aggressively pursue domestic refining to take advantage of improved refining margin during period of low oil prices. To address the current sub-optimal performance of the domestic refineries, a new rehabilitation strategy, which includes the rehabilitation of all refineries, modification of the refinery business model and governance structures that tie capital investment performance to actual refinery output has been put in place”, Baru explained.

The decline in revenue earnings caused by the fall in oil price is of great risk to the financing of the budget. The main challenge is obtaining the crude volumes to a level that will ensures the delivery of the revenue target.

He noted that the government is making efforts to ease the security issues in the country, so that the corporation could guarantee the volumes, This Day reports.

Anita Fatunji