Mallam Mele Kyari, the Group Managing Director, the Nigerian National Petroleum Corporation (NNPC), has said the corporation is working on lowering crude oil cost of production from $17 per barrel to about $10 per barrel.
Kyari disclosed this at Seplat Energy Summit 2020, titled “The Impact of Global Energy Transition on African Economies” held on Thursday. He said “We are making efforts to drive down the cost of crude oil production to $10 per barrel. We are doing that mindful that it doesn’t stifle investments or hamper the growth of local content and capacity.”
Nigeria’s high cost of production compared to other oil-producing countries like Saudi Arabia and Iraq that are producing at around $5 to $6 per barrel has rendered the demand for the nation’s oil uncompetitive in recent months following over 60 percent decline in global oil prices.
The high cost of production continues to hurt Nigeria’s revenue generation and ability to service its growing debt, especially with crude oil now trading between $40 and $43 per barrel. Experts have said Nigeria must broaden its revenue generation by taking advantage of its vast gas resources and improve tax collection efficiency.
Kyari said “Aside driving down the cost of production, we are also focusing on gas development. We have huge gas resources which can be harnessed to power industries and engender development.”
“It is very important that we have connectivity in Africa in terms of economic activities and oil and gas infrastructure. That is why we are working hard to have the Trans African Gas Pipeline and to expand the West African Gas Pipeline.”
Other speakers at the summit were Mr. Mike Sangster, MD, TOTAL E&P Nigeria; Mrs. Audrey Joe- Ezigbo, President, Nigerian Gas Association, and Mr. Roger Brown, Seplat CEO Designate.