Kachikwu Seeks Reduction in $30 Per Barrel Cost of Oil
A minister-designate and Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu has said the $30 currently spent by oil companies to produce one barrel of crude oil in Nigeria is too high and should be reduced in view of the current low price regime.
Speaking at a Luncheon organised in his honour by the Petroleum Club in Lagos at the weekend, Kachikwu stated that asset management by the NNPC was so poor that the state-run oil company had relied only on information provided by the international oil companies (IOCs).
According to him, the high cost of producing oil and gas in the country was caused by NNPC’s poor asset management, adding that one of the legacy issues that faced the current administration was excessive corruption at the NNPC, and the Ministries of Petroleum and Defence.
“Unless the petroleum industry gets sorted out, not much really can happen in the outside economy. That is the reality,” he added.
Kachikwu insisted that NNPC’s poor performance over the years was not due to low oil price.
He revealed that while the NNPC was operating at a huge loss during the period of low price regime, Malaysia’s Petronas raked in revenue of $2 billion; while Norway’s Statoil generated income of $16 billion within the past one year.
He said with a declining foreign reserves and joint venture production, which has slumped by 15 per cent within 10 years, the country cannot afford a high cost of producing oil and gas.
Kachikwu further stated that one of his immediate challenges was NNPC’s reputation, adding that the errors in NNPC have to be corrected otherwise it would affect the country’s reputation.
He described the Single Treasury Account approved by President Muhammadu Buhari for government ministries and agencies as a welcome change and the only way to track down government’s income.
According to him, before the introduction of TSA, it was difficult to find out the number of bank accounts operated by the corporation.
In his speech, the Chairman of Petroleum Club, Otunba Funsho Lawal described Kachikwu’s appointment as appropriate, given his pedigree, achievements and performance so far in office.
“We are taking the first slot to be the first to welcome the minister-designate immediately after his confirmation by the Senate,” Lawal added.
Lawal also highlighted
some of the challenges facing Nigeria’s oil and gas sector, which include: non-passage of the Petroleum Industry Bill (PIB) after eight years; inability of the NNPC to meet its cash call obligations to the joint venture partners; subsidy and deregulation issues; slump in oil prices, which have led to dwindling crude oil revenues to the federal government and gas supply challenges.
He described Petroleum Club as a professional but not trade association, adding that members are leaders in the oil and gas industry, who network among themselves to fashion out ways of moving the industry forward.