NNPC to tackle high crude oil production cost
the Nigerian National Petroleum Corporation has expressed its readiness to put in place measures that will reduce the cost of crude oil production in Nigeria to create market for the country’s crude.
The Group Managing Director, NNPC, Mallam Mele Kyari, who disclosed this on Wednesday at the Central Bank of Nigeria’s round-table session, said the move was also aimed at making the country a choice destination for Foreign Direct Investment.
According to Kyari, the current cost of crude oil production in the country is within the range of $15 to $17 per barrel, while Saudi Arabia has a cost of production that is between $4 and $5 per barrel.
He noted that due to the uncertainty of the global crude oil market, countries producing at the cheapest price would remain in the market while those with high cost of crude oil production would not be able to cope with the competing prices.
He said due to the coronavirus pandemic, Nigeria “has about 50 cargoes of crude oil that have not found landing – this implies that there are no offtakers for them for now due to the drop in demand.”
“Today, I can share with you that there are over 12 stranded Liquefied Natural Gas cargoes in the market globally. It has never happened before. The LNG cargoes that are stranded with no hope of being purchased because there is abrupt collapse in demand associated with the outbreak of coronavirus,” Kyari added.
He said that in the face of the coronavirus pandemic, countries such as Saudi Arabia had given discount of $8 and Iraq $5 to their offtakers in some locations.
The GMD said the NNPC was working round the clock to increase the countries daily production to three million barrels per day and shore up the crude oil reserves to 40 billion barrels.
He called on government at all levels, captains of industries and the organised private sectors to brace for the new low regime of global crude oil prices, adding that realistic estimates must be made to reflect the current realities of the crude oil market.