The Federal Government said it has concluded arrangement to prevail on International Oil Companies (IOCs) to cut the high oil production cost especially now that the price of crude oil in the international market is plummeting. The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu who confirmed the development on Monday stated that since the price of crude was very low, it makes economic sense to cut cost of production.
He disclosed that the cost of production according to the National Petroleum Policy was $28.99 per barrel, a development that makes Nigeria one of the most expensive areas for doing business in the oil sector.
According to him “The nation needs to review the current high cost of producing oil. It does not make sense to produce oil at such high cost, especially now that crude oil price has dropped from over $100 to $50 per barrel"
“It will not make sense to produce at high cost anymore. We will sit with the IOCs to look at the cost elements in order to take a better decision. It is in the best interest of everyone to bring down the high cost of producing oil in Nigeria.”
The Minister stated that current cost of production makes Nigeria one of the most expensive oil provinces in the world. He gave the breakdown of the current production cost as follows: $8.81, $13.19, $4.11 and $2.95 as production costs, capital spending, gross taxes and admin/transport per barrel respectively.
