FG To Firms- “Cut Oil Production Cost Or Stop Producing”
The Federal Government on Tuesday charged crude oil-producing companies operating in Nigeria to either cut down the cost of producing the commodity or allow it to remain in the ground.
The government stated that while the country’s target was to grow its crude reserves and production to 40 billion barrels and four million barrels per day, respectively, the cost of extracting the commodity from the ground was one of the highest globally.
This is coming as the Nigeria Extractive Industries Transparency Initiative announced that the country lost over $200bn in the past 10 years as a result of the non-passage of the Petroleum Industry Bill.
Speaking at a symposium on the Petroleum Industry Governance Bill organised by NEITI in Abuja, the Minister of State for Petroleum Resources, Ibe Kachikwu, stated that aside the many benefits of the PIGB, the bill would also help in addressing the cost of producing crude oil in the country.
Kachikwu, who was represented by one of his Senior Technical Advisers, Johnson Awoyemi, stated, “The bill will also address the issue of cost. Nigeria operates one of the highest costs of extraction among oil provinces in the world. It is clear and clearer that we either produce the oil at a good cost, or we leave it in the ground.”
The Federal Government had recently announced a crude production cost target of $15 per barrel, as the Nigerian National Petroleum Corporation on March 5, 2018 declared that it had brought down the cost of producing the commodity to $20 per barrel.
Kachikwu told participants at the symposium that the message was becoming clearer, adding that crude oil producers in Nigeria had to reduce their cost of production if the country was to be competitive in the modern low oil price world.
He stated that the long held aspiration of Nigeria’s upstream sector was to grow crude oil reserves to 40 billion barrels and production to four million barrels per day, improve local content, maximise the sector’s value and most importantly, derive as much revenue from gas as from oil.
“Now is the time to tweak the existing industry laws and come up with a new legal, institutional and commercial framework that will liberalise the petroleum industry as well as create a competitive business environment that will enhance Nigeria’s revenue,” the minister stated.
Kachikwu noted that the PIGB had gained considerable mileage with its passage by both the Senate and the House of Representatives.
This, he noted, had led to a wave of confidence in the industry, as millions of Nigerians believe that it would address the institutional, fiscal and regulatory uncertainties bedevilling the sector, bringing to an end the exacerbated decline in foreign investments in the country’s hydrocarbon projects.