Nigeria ranks significantly among the top 10 oil-producing countries with the highest cost of crude oil production per barrel. This is according to Paul McGrath, the Chairman/Managing Director, ExxonMobil Affiliate Companies in Nigeria.
McGrath described Nigeria as the largest oil producer in Africa and with hydrocarbon prospects among the brightest in the world.
“Nigeria ranks among the top 10 countries with the highest cost of producing oil per barrel and its equivalent in gas. High cost is a major disincentive to investment, especially at this time of considerable global competitiveness. Operating costs are increasing due to attendant increase in required maintenance and well workovers. Security costs are escalating as peculiarities of the business environment require additional resources to be deployed to secure our people and assets.”
McGrath, however, made known that there are fixes to be put in place if the country aspires to maintain and expand the investment profile in the hydrocarbon industry.
Nigeria’s oil price: The average production cost for a barrel of oil in Nigeria has declined from $78 per barrel as at August 2015, to $23 per barrel, representing 70.5% reduction in four years.
The bearish trend in the global oil market: Recently, there was a dip in the prices of crude oil due to the ongoing trade war between the U.S and China. Nairametrics revealed that the price of crude oil posted a 7-month low, declining by 4% to $57 a barrel in two days. At the time of filing this report, Brent crude oil price stood at $58.3 per barrel.
Analysts have thereby raised concerns over the continued bearish trend in the oil market, stressing that Nigeria’s 2019 budget implementation is under threat as oil is Nigeria’s main source of revenue.
Meanwhile, the Organisation of the Petroleum Exporting Countries (OPEC) stated it would maintain its production cut in order to fight off market pressure. Specifically, OPEC plans to regulate the crude oil market throughout 2019.
OPEC had used its production cut approach to drive up oil price until the U.S-China trade war and several sanctions caused a dip in the market.