Nigeria might be forced into stopping the production of oil if the rising cost remains unchecked.
This was disclosed on Monday by the Minister of State for Petroleum Resources, Dr Ibe Kachikwu.
He said Nigeria has not found a way to cut its cost of productions like her competitors in the world market have done.
Speaking at the opening ceremony of the Nigeria Annual International Conference and Exhibition organised by the Society of Petroleum Engineers, he 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.”
Due to this, he said, the country is facing the grim possibility of losing all margins cost would outweigh returns significantly.
The minister also lamented the loss of$300bn in oil investments globally due to the fall in oil price.
In the case of Nigeria, the loss can also be traced to inconsistent policies and an inefficient security policy.
This has led to a situation where investors would rather invest in other countries that provide these things. Meaning Nigeria’s loss is the rest of Africa’s gain.
“The situation is very challenging when it comes to losing opportunities arising from investment.
“For the first time in the oil sector, the decline in the oil price resulted into loss of jobs.
“Infrastructural gap is another factor which the decline in the price created.
“We have an infrastructural gap deficit of $5bn because the government was responsible for infrastructure and we did not engage the private sector.
“The whole idea of the new petroleum policy is to move the private sector into financing part of the projects because Government cannot do it alone,’’ he said.
