FG to compel oil firms to lower oil costs

The Minister of State for Petroleum Resources, Emmanuel Ibe Kachikwu, has said that government will soon compel international oil companies as well as local firms to lower their cost of producing crude oil in the country.

Speaking in Lagos, Kachikwu said Nigeria’s cost of production was the highest in the world.

Currently, a barrel of crude is produced at $20 by the international oil companies - Shell Petroleum Development Company (SPDC), Total, Mobil Producing Unlimited, Chevron Nigeria Limited, Addax and Nigerian Agip Oil Company (NAOC) - against that of Saudi Arabia, Qatar and UAE of $9 a barrel.

This, the minister described, as blatantly high and unacceptable to the Federal Government.

To this end, Kachikwu said government would not only compel but force the oil companies to accept it.

“When you look at our cost of production in Nigeria, it remains blatantly high. Even despite the efforts made so far, the figure I am seeing has not dramatically reduced. So, we are not only going to force this, we are going to compel it because there is no way this country can be producing at the soaring price with no margin left.

“Only oil companies that are efficient, able to drive down cost, will have footage in Nigeria,” he stated.

“The reality is that every side has benefited from this efficiency. A country where prices moved past $20 per barrel could not even enforce requirement terms that would enable us negotiate with the multinationals to plough back what has been calculated as close to $60 billion of money spent on oil companies that didn’t get to Nigeria because some people didn’t do their work.

“That is the height of inefficiency,” he said.

Kachikwu said Nigeria’s oil industry will need $50 billion to fill current infrastructural gap, adding that his ministry would be working with the NNPC, agencies and parastatals to remove government‘s hold in the sector.