Nigeria’s National oil firm (NNPC) has revealed that the cost producing a barrel of crude oil is now $23, a significant drop that ensures it makes enough profit per barrel of oil, even though it still maintains a relatively high cost of production when compared to some other producing nations.
The Nigerian National Petroleum Corporation (NNPC) said the country had saved a minimum of $3 billion per annum on Crude oil production.
In a statement signed by Mr Ndu Ughamadu, Group General Manager, Group Affairs Division, on Wednesday in Abuja, it said the cost of crude oil production went down from 78 dollars per barrel as at August 2015 to 23 dollars per barrel.
This, it said represented 70.5 per cent reduction in production cost.
It said the Group General Manager of National Petroleum Investment Management Services (NAPIMS), a unit of NNPC, Mr Dafe Sejebor, disclosed this during the inauguration of the Anti-Corruption Committee of the unit.
He said NAPIMS arrived at the figure after looking at the difference between the 78 and 23 dollars which represent the old and new cost of production in relation to the present daily average production in the country.
“If you knock down your cost of production from 78 dollars per barrel to 23 dollars, take the difference and multiply by the average daily production, you will discover that we are saving a minimum of 3billion dollars in the upstream for both Production Sharing Contracts (PSCs) and Joint Ventures (JVs)”, he said.
The Nigerian National Petroleum Corporation (NNPC) says Nigeria now has an average cost of production of $23 a barrel. The country is also aiming for further cost savings to drive the production costs per barrel to $17-$19 for offshore and onshore production respectively.
Even though significant savings have been achieved, Nigeria still has a relatively high production cost compared to other oil producing countries like Saudi Arabia which has a production cost of $8.98 per barrel and Iran which has a production cost of $9.08 per barrel. Besides production costs, militant attacks are a critical factor hindering Nigeria from maximizing petroleum revenue.