The Minister of State for Petroleum Resources, Dr. Ibe
Kachikwu, has said the country will have to halt oil production if the cost of
producing the commodity remains stubbornly high.
Kachikwu stated this today in his address at the opening
ceremony of the Nigeria Annual International Conference and Exhibition
organised by the Society of Petroleum Engineers in Lagos.
He said the country was being left behind by its peers who
had dramatically reduced their costs of production.
“When you look at the cost of production in Nigeria, it
remains blatantly high. Our cost per barrel today is about $27 per barrel for
JV (joint venture) fields. In Saudi Arabia, it is about $9. So we are way apart
in terms of cost that anything that happens will hit us very hard,” Kachikwu
said.
He said countries within the United Arab Emirates had cut
costs very dramatically, describing them as the lowest-cost producers in the
world.
The minister said, “Even though we have been singing over
the last two years that we need to drive cost down, the current figure that I
still have showing me the numbers of last year have not shown me a major
dramatic reduction in the cost of production.”
He said they would compel a reduction in the cost because
“there is no way this country will produce oil at this sort of swelling prices
that we see; there will be no margins left for this country.”
According to Kachikwu, only oil companies who are able to
drive down costs will have a footage in Nigeria.
He said, “For me, you rather leave the oil in the ground
than produce at a cost that doesn’t make sense. So, cost is going to be a very
high driver. So that is certainly one area we are focusing on; we are working
collaboratively with oil companies.
“But let’s make no mistake about it: If we cannot negotiate
it down, we will compel it or we will stop the production; it does not make any
sense.”
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