An African National Oil Company (NOC) is
producing over 2million barrels of crude oil per day but is bedeviled
with very high cost of crude oil production. Blessed with abundant oil
resources, the current national government of the NOC is very concerned
with this phenomenon of high production cost of over $30.00 per barrel
and is desirous to bring the price down to $15.00 per barrel or less.
The author of this paper is given the herculean task to diagnose the
cause of the high production cost and then propose ways to reduce the
cost to under $15.00 per barrel. The approach deployed during the
diagnosis phase included having stakeholders’ engagement covering the
International Oil Companies (IOCs), the Independent Producers Group,
Industry Regulators, and the contracting community. This paper is a
summary of the diagnosis of the so called ‘NOC Cost Premium Factors’ and
as well as the cost reduction recommendations currently being
implemented, which can be of benefit to other NOCs having similar issues
and industry in general.