NNPC to Reduce Cost of Crude Oil Production

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The Nigerian National
Petroleum Corporation (NNPC) has expressed its readiness to strategically put
in place measures that would alleviate the cost of crude oil production in
Nigeria to create market for Nigeria’s crude and make Nigeria a choice
destination for Foreign Direct Investment.

Group Managing
Director of the NNPC, Mallam Mele Kyari, made this known at the Central Bank of
Nigeria Round Table discussion in Abuja Wednesday.  

Mallam Kyari stated
that at the moment the cost of crude oil production in the country was within
the range of $15 to $17 per barrel, adding that some leaders in the Industry
such as Saudi Arabia’s cost of production is between $4 and $5 per barrel.

He noted that due to
the uncertainties of the global crude oil market, countries that produce at the
cheapest price would remain in the market while jurisdiction with high cost of
crude oil production would not be able to cope with the competing prices.

He noted that due to
the Coronavirus pandemic, Nigeria has about 50 cargoes of crude oil that have
not found landing, adding that this implies that there are no off-takers for
them for now due to drop in demand.

 “Today, I can share with you that there are
over 12 stranded LNG cargoes in the market globally. It has never happened
before. LNG cargoes that are stranded with no hope of being purchased because
there is abrupt collapse in demand associated with the outbreak of
coronavirus,” Mallam Kyari submitted.

He said that in the
face of the Coronavirus global pandemic, countries like Saudi Arabia have given
discount of $8 and Iraq $5 to their off-takers in some locations meaning that when
crude oil sells at $30 per barrel, countries like Saudi Arabia is selling at
$22 per barrel and Iraq selling their crude at $25 per barrel.

The GMD said the NNPC
was working round the clock to increase the countries daily production to
3million barrels per day and shore up the crude oil reserves to 40billion
barrels.

Mallam Kyari called
on government at all levels, captains of Industries and the organized private
sectors to brace up 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.