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.
The costs are still quite high
The report does not state if the costs of production are with respect to onshore or offshore fields. 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. The Forcados terminal, which is a major transport route witnessed downtime due to repair work carried out after several militant attacks. The drop in prodcution volumes and crude oil prices last year, pushed the country’s economy into a recession for the first time in almost 30 years.
The Nigerian National Petroleum Corporation (NNPC) was established April 1 1977 and is in charge of the country’s petroleum resources. The NNPC’s functions include refining, petrochemicals and products transportation as well as marketing. The NNPC has however run at a loss for most of the past decade majorly due to inefficient refineries, as well as bearing the brunt of a subsidy on petroleum products brought into the country