The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has warned that the Federal Government will be compelled to halt oil production if the cost of production remains high.
He
disclosed this on Monday, July 31, 2017, while speaking at the opening
ceremony of the Nigeria Annual International Conference and Exhibition
organised by the Society of Petroleum Engineers in Lagos.
In his remarks, the minister said, "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.
"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.
"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.
"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."
The
minister noted that only oil companies that are able to drive down
costs will thrive in the country with the high production costs.
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