Oil producing companies in Nigeria have been enjoined by the Federal Government to either reduce their cost of production or leave the crude oil in the ground.
This is coming as the government is determined to increase its daily crude oil output and reserves to four million and forty billion barrels, respectively. Unfortunately, the high cost of extracting crude oil in Nigeria, which is one of the highest in the world, has hampered this effort.
Nigeria’s Minister of State for Petroleum Resources, Ibe Kachikwu, made this known while speaking at a symposium organised by the Nigeria Extractive Industries Transparency Initiative in Abuja. According to him, oil producers in the country should take advantage of the newly signed Petroleum Industry Governance Bill (PIGB), as one of the benefits of said bill is its ability to reduce the cost of extracting crude oil.
The bill will also address the issue of cost. Nigeria operates one of the highest costs of extraction among oil provinces in the world. It is clear and clearer that we either produce the oil at a good cost, or we leave it in the ground
Ibe Kachukwu, who was represented by one of his Senior Technical Advisers John Awoyemi, further stressed that it has become imperative for Nigerian oil companies to drastically reduce their cost of production, especially if Nigeria is to compete favourably in the current global oil price order. He also enjoined them to take maximum advantage of their sector by generating as much revenue from oil and gas as possible.
Kachukwu also praised the PIGB bill for the considerable reassurance it has given stakeholders in the industry since its passage.
About the PIGB bill
The Petroleum Industry Governance Bill is aimed at providing the Governance and Institutional Framework necessary for the Petroleum Industry to operate. In the same vein, it also “seeks to incorporate the reforms proposed under the Petroleum Industry Bill. It addresses the reforms to the institutional framework of the petroleum industry. Some of these key reforms include-
- The establishment of an independent regulatory commission, and
- The unbounding of the NNPC into two limited liability companies.