Nigeria-focused oil company Lekoil has said it will reduce workforce numbers as part of the "immediate and accelerated" implementation of the company's general and administrative ("G&A") cost reduction measures.
"These measures are targeting an annual reduction of US$8.0 million or at least 40% in G&A costs, which is inclusive of a reduction in staff numbers. The Company has commenced the immediate execution of these measures which will be completed within the next four to six weeks," Lekoil said Friday, without providing info on how many people would be affected.
Lekoil also said that production from its Otakikpo field off Nigeria would be unaffected by cost reduction measures.
Also, Lekoil has confirmed it has paid the first installment for its share of the costs at the OPL 310 block offshore Nigeria to operator Optimum.
The 2 million payment was agreed in January, and it is the first of two installments Lekoil is due to pay to Optimum Petroleum to cover "sunk costs and consent fees” for the OPL 310 offshore block.
According to the agreement in January, where Lekoil got more time to make the payments, Lekoil was to pay $2 million by March 20, and another $7.6 million by May 2, for a total of $9,6 million to Optimum, or risk losing its stake in the block containing the Ogo discovery.
Apart from having to make the payments, Lekoil has until July 2020, to provide evidence of ability to fund its share of the drilling costs in the block.
Lekan Akinyanmi, LEKOIL's CEO, commented, "We have kept our commitments on our world-class asset, OPL 310, despite the detrimental effects of the COVID-19 pandemic on the global economy and the subsequent fall in oil price. With the implementation of our cost reduction measures, we believe we are in a good position to navigate this challenging period."
Nigeria’s Department of Petroleum Resources ordered oil and gas companies on Thursday to reduce their workforce and practice social distancing, tightening measures to stem the spread of the coronavirus.
Also, a few days ago, Nigeria's petroleum regulator ordered oil and gas firms to move to 28-day offshore staff rotations after six workers aboard an offshore support vessel tested positive for coronavirus.