FG to com­pel oil firms to lower oil costs

Daily Trust - - BUSINESS - From Kay­ode Ekun­dayo, La­gos

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.

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