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Nigeria can no longer sustain over $30 crude oil production cost, says Minister

Oct 29, 2019 | The Newsroom
Nigeria can no longer sustain over $30 crude oil production cost, says Minister

The Minister of State for Petroleum Resources, Timipre Slyva, said that the over 30 dollar crude production cost  in Nigeria is unsustainable and must be reduced to drive growth and development.

Slyva made the remark at a Seminar on Effective Cost Management in the Oil and Gas sector in Abuja on Tuesday.

The Seminar was organised by Petroleum Technology Development Fund (PTDF) in collaboration with Quantity Surveyors Registration Board of Nigeria (QSRBN).

He said Nigeria must strive to reduce cost of crude production to help boost revenue generation for economic growth and development.

“Let me go back the memory lane, the technical cost of crude oil production in the 80s/90s was around four dollars per barrel.

“In the early 2000, it was between five dollars and  six dollars per barrel while today, it is over 35 dollars per barrel.

“It is interesting to note that some countries like Kuwait and UAE are producing at less than 10 dollars per barrel.

“In the regime of 50/60 dollars per barrel price of crude oil, a cost of over 30 dollars is unsustainable and that is why we need to come up in this programme on what we need to do to reverse the trend,” he said.

The Minister noted that Nigeria, the largest economy in Africa with Gross Domestic Product (GDP) of 400 billion dollars and population of over 180 million, needed aggressive industrialisation and economic diversification.

He said in spite of the quest for economic growth and great investment opportunity in the Oil and Gas Sector, the cost of crude oil production in Nigeria remained one of the highest in the world.

He said government had set target through an industry policy document to reduce the cost of crude extraction by at least 30 per cent.

He said the document recognised that to cut production cost, reducing contract approval cycle, transparency, regulatory transaction cost among others was imperative.

“Currently, there is Industry Committee headed by the Permanent Secretary on reduction of crude oil cost production and crashing of contracting cycle in the ministry,” he said.

The Minister commended PTDF and QSRBN and urged quantity surveyors as cost engineers to deploy the principles of total cost management and come up with solution on how to minimise the impact of cost drivers.

He named the drivers to include corruption, national body policies, infrastructure deficit, bureaucracy, regulatory issues and insecurity in the oil producing region.

“I wish to seek for your indulgence to always come up with your contributions on better ways to achieve effective cost management in the oil sector.

“It is my hope that we shall all use the outcome of this conference to give our oil sector what they require to bring down the cost of crude oil production to a single digit as obtainable in the other economies.

“This is an urgency of yesterday,” he said

The Minister was represented by his Chief of Staff, Moses Olamide.

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