The Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari has said that the corporation is working on lowering the cost of production of each barrel of crude oil from $17pb to about $10pb. This was disclosed at Seplat Energy Summit 2020, themed “The Impact of Global Energy Transition on African Economies” held on Thursday.
According to Kyari, efforts are being put in place to drive down the cost of crude oil production to $10 per barrel. The corporation is also putting measures in place to make sure this new development doesn’t stifle investments or hamper the growth of local content and capacity.
Nigeria’s Cost Of Production Compared To Other OPEC Countries
Drawing a comparison between Nigeria’s high cost of production to other OPEC countries like Saudi Arabia and Iraq that are producing at around $5 to $6 per barrel, it’s clear that our high cost of production has reduced the demand for our black gold. Also, Nigeria’s oil has experienced an over 60% decline in the global oil prices making it uncompetitive in recent months.
Nigeria’s oil revenue has been in a dwindling state due to the high cost of production. More so, this has affected her ability to service her growing debt, especially with crude oil now trading between $40 and $43 per barrel.
According to experts, Nigeria must broaden its revenue generation by taking advantage of its vast gas resources and improve tax collection efficiency.
Kyari said, “Aside driving down the cost of production, we are also focusing on gas development. We have huge gas resources that can be harnessed to power industries and engender development.
It is very important that we have connectivity in Africa in terms of economic activities and oil and gas infrastructure. That is why we are working hard to have the Trans African Gas Pipeline and to expand the West African Gas Pipeline.”
Other speakers at the summit were Mr. Mike Sangster, MD, TOTAL E&P Nigeria; Mrs. Audrey Joe- Ezigbo, President, Nigerian Gas Association, and Mr. Roger Brown, Seplat CEO Designate.
Knowing fully well that Nigeria is an oil economy, and also the main factor behind Nigeria’s growth, accounting for more than 91% of total exports, it’s paramount to lower the cost of production as it will have a ripple effect on the already over-bloated economy.
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