‘Nigeria, One Of The Highest Cost Producers Of Crude’

The draft Petroleum Policy for Nigeria, which is currently being debated by stakeholders, has delivered a verdict that has been subject of whispers in the boardrooms until now.
“Nigeria is one of the highest cost of extraction oil producers in the world, estimated at $29/pdl”, says the 115 page document on its 15th page.
“Nigeria has to substantially reduce the costs of production if the country is to be competitive in the modern low oil price world, and if it is to have anything more than a bare minimum government take” the draft advises.
According to the document, Nigeria is only less expensive, as a cost per barrel producer, than Brazil and United Kingdom, in a 12 country ranking that includes Saudi Arabia, Iran, Iraq, Russia, Indonesia, Norway, US Non Shale, US Shale, Canada and Venezuela.
The cost ranking pulled out of a U cube analysis by Rystad Energy, the Norwegian consulting firm, doesn’t indicate whether this was an average of a basket that includes crudes from deepwater, shallow water and onshore terrians.
Which is significant, especially as it features different figures for US Shale $23.35/pbl and US Non Shale: $20.99/pbl.
What it does, however, is that it breaks down the cost structure for Nigeria as follows: Gross Taxes: $4.11 capital spending: $13.10, production cost $ 8.81 and Admin/transport costs: $ 2.97.
This statement on cost by the Petroleum Policy Team at the Ministry of Petroleum, contradicts the Minister of State for Petroleum, Dr. Ibe Kachikwu’s January 2016 statement that would still make profit of crude oil prices averaged $20/pbl.