The Presidency has said Nigeria will suspend the production of crude oil if the cost of producing it in the country is not reduced.
At the moment, Minister of State for Petroleum Resources, Ibe Kachikwu, explained that Nigeria’s cost of producing crude oil is abnormally high, while other oil producing countries had reduced their costs.
Kachikwu, speaking in Lagos at the Nigeria Annual International Conference and Exhibition, noted that it now costs $27 to produce a barrel of crude oil in Nigeria, against $9 in Saudi Arabia and other Arab Nations.
Most of the oil production in Nigeria is through a joint venture between multinationals and Nigerian National Petroleum Corporation (NNPC)
The Minister explained that except the oil companies in Nigeria reduce their cost of producing crude oil, it is better to leave the crude oil in the ground or there will be no margin for Nigeria.
“There is no way this country will produce oil at this sort of swelling prices that we see; there will be no margins left for this 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.
“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,” the Minister said.