Nigeria Looking To Reduce Oil Production Cost To $15 Per Barrel

Minister of State for Petroleum Resources, Dr. Ibe Kachikwu

 

The Federal Government is looking to force a further decrease in the cost of producing crude oil in Nigeria to $15 per barrel.

In furtherance of this, approval for projects in the petroleum industry would be based on the cost of producing oil and gas from the project as only proposals that adhere to the $15 cost would be considered.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu revealed this  at the on-going Nigerian Oil and Gas Conference and Exhibition in Abuja.

He noted that the Federal Government is keen on ensuring that the country’s refineries work.

Kachikwu stated that efforts had been made to reduce the cost of production of crude oil from about $32per barrel to $23 per barrel, noting however, that efforts are on to further ensure the cost are brought down to below $15 per barrel.

He further noted that efforts to bring down cost of production should not be by the government or through policies, but should be driven by the private sector.

“The ministry is going to be coming up with a bench mark to analyse and compare companies who do business on Nigeria and what cost of production they are running. This is because any unbelievable cost of production, basically impacts on the revenue stream of the country.

“We need to start finding out what companies who were awarded recognition are doing and why are the others not going in that direction. However, the excuses of the environment been different or absent infrastructures can no longer hold water, because there are a lots of countries with peculiar situation as ours that are producing oil at relatively lower level.

“One of the mandates that I am giving the Department of Petroleum Resources, DPR, is that as we begin to look at new projects, the cost at which we are going to produce that oil is going to become critical to our ability to approve those projects for you. So it is becoming a major front burner item,” Kachikwu said.

He further stated that henceforth, oil companies must take the initiative to ensure stability in their area of operations.

He said, “Yes, government needs to provide securities, policies. But it is absolutely important that you cannot continue to drill for oil when there is a host community’s crisis. We have seen that in Ogoni land. It is important that for every area that you are active, you must begin to ask yourself what more can you do more than what the law said you should do.

“It is not an issue of meeting compliance as it doesn’t take away crisis but an issue of what is seen in an operating environment. And I do understand that the burden imposed on oil companies can be huge, but it is what it is.

“Also, we need to over the next few months begin to work together to set up what are globally enforceable Memorandum of Understanding, MoU, that we can see around oil producing areas and what more can we do, and if government needs to be part of it, so be it. But we cannot get into the circle of coming out and then after one year going back into the hole.”

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