Nigeria may halt the production of oil soon if production costs don’t nose dive to a minimum

Kachikwu says Nigeria is the only oil producing country with high costs of oil production

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has said the country will have to halt oil production if the cost of producing the commodity remains stubbornly high.

Kachikwu stated this today in his address at the opening ceremony of the Nigeria Annual International Conference and Exhibition organised by the Society of Petroleum Engineers in Lagos.

“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,” Kachikwu said.

He stated that there were plans to force cost reductions as the current production costs will provide little or no profit margins for the country.

“For me, you rather leave the oil in the ground than produce at a cost that doesn’t make sense. So, cost is going to be a very high driver. So that is certainly one area we are focusing on; we are working collaboratively with oil companies”, Kachikwu said.

“But let’s make no mistake about it: If we cannot negotiate it down, we will compel it or we will stop the production; it does not make any sense.”

Nigeria with no oil? It’s hard to imagine, frankly.

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