Okechukwu Nnodim, Abuja
Nigeria’s highest and unacceptable crude oil production cost comes from indigenous oil firms, the Group Managing Director, Nigerian National Petroleum Corporation, Mele Kyari, said on Thursday.
Kyari, who said this during a Seplat Energy Summit 2020 webinar, also noted that the deployment of expatriates was contributory to high production cost, as some companies produced crude oil for as high as $45/barrel.
The cost of the commodity had hovered around $43/barrel in about two weeks.
Kyari had recently disclosed that some oil firms in the country were producing at over $90 per barrel.
The NNPC boss, however, stated that few companies such as Seplat would achieve the target of cutting down the production cost to $10/barrel by 2021.
Kyari said, “When you come to the indigenous oil companies, and I’ve made an exception of Seplat and, of course, a few others, I can share with you that the highest cost of production that we have in this industry comes from companies operated by local oil firms.
“Unfortunately as it is, that is the reality.”
He insisted that production cost must be reduced in the oil sector, as there was no way way the country could sustain the current cost structure.
“Some of our assets are producing oil in the excess of $45/barrel. It is simply not feasible in today’s circumstance,” Kyari said.
He added, “It simply also means that probably you are subsidising the upstream, and, of course, nobody subsidises the upstream anywhere in the world. But that is what we are practically doing.”
Kyari also stated that surprisingly, some multinational oil companies and partners of NNPC were also producing oil at completely unacceptable prices.
He joined the Minister of State for Petroleum Resources, Timipre Sylva, to call on operators to cut down on oil production cost.
Sylva, who gave the opening remarks at the summit, stated that government had rolled out strategies to reduce oil production unit cost.