The Minister of State for Petroleum Resources, Timipre Sylva, says the ministry is worried that Nigeria has one of the highest costs of crude oil production in the world.
The Herald can report that producing a barrel of oil in the nation gulps about $30.
Sylva said the trend was not sustainable especially now that the COVID-19 pandemic has imposed new realities on the world.
According to him, the Nigerian National Petroleum Corporation (NNPC) has devised initiatives to drive down the cost of oil production in the country.
Reacting to the high production costs, Sylva told Premium Times, “This is a big problem for the industry because it is not sustainable to have a situation where our average cost per barrel is around $30 per barrel. COVID 19 has taught everybody that we cannot continue like this.
“NNPC is doing very well in this regard. They are looking deeper into the budgets of operating companies. Before now, NAPIMS (National Petroleum Investment Management Services) had completely abdicated its responsibility of auditing the cost of production with the joint venture companies and became the contracting agency. But, under the current leadership of the GMD (Group Managing Director), NAPIMS is now deeply more to its responsibility. And we are beginning to see a lot more compliance in the area of auditing of the accounts of the JVCs.
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“The contracting cycle was also a big problem. The long contracting cycle led to higher costs of projects, and by extension, higher cost per barrel.
“But, now our regulatory agencies and bodies are living up to their billing by shortening approvals and contracting cycles as a result bringing down the cost of projects. We will begin to see soon a reduction in the cost per barrel. NCDMB (Nigerian Content Development Monitoring Board), NNPC, DPR are involved very largely in this.”