The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has stated that Nigeria will have to halt oil production if the cost of producing the commodity keeps skyrocketing.
Kachikwu stated this on Monday in his address at the opening ceremony of the Nigeria Annual International Conference and Exhibition organised by the Society of Petroleum Engineers in Lagos.
According to him, 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.
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 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.”