Concerns regarding petroleum theft and security in the nation have been voiced by the Federal Government and oil and gas companies, who note that increased operational costs have an impact on profit margins and the nation’s ability to fulfill its $10 per barrel production cost objective.
Speaking during the yearly conference of the Association of Energy Correspondents of Nigeria (NAEC) in Lagos, yesterday, the stakeholders noted that the fiscal environment, especially in the upstream sector remains undermined by insecurity and crude theft.
The Group Chief Executive Officer of Nigerian National Petroleum Company Limited (NNPCL) Mele Kyari had decried the country’s high cost of production in the wake of the COVID-19 pandemic, stating that 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 had 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 jurisdictions with high cost of crude oil production would not be able to cope with the competing prices.
Yesterday, Kyari confirmed that the country’s production is very low mostly because of the security challenges in the Niger/Delta, adding that if the country resolves the security issues, production will get back to 2.1 million barrels per day.
Notwithstanding the challenges with oil production, Kyari said the NNPCL, in the last three weeks, has settled issues with its partners, having met the terms and conditions in the Petroleum Industry Act (PIA).
However, despite crude oil selling at a premium presently, the country has been unable to optimise the benefits due to poor production, theft and high subsidy costs.
Nigeria’s oil production slumped by 28 million barrels between January and July 2022, threatening the Federal Government’s N9.37tn oil and gas revenue target by the end of the year.
The Federal Government, in the 2023-2035 Medium Term Expenditure Framework & Fiscal Strategy Paper recently presented by the Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, blamed oil production shut-ins owing to pipeline vandalism, crude oil theft and high petrol subsidy cost.
Chief Executive Officer of Nigerian Upstream Petroleum Resources Commission (NUPRC), Gbenga Komolafe, yesterday acknowledged that the challenges of seamless production in the form of rampant crude theft and sabotage of critical infrastructure are still with us.
To address the concerns, Komolafe, who was represented by Dr Abel Nsa, noted that the Commission is developing a roadmap for tackling the security challenges in the industry, adding that it is also liaising with the top echelon of Nigerian Security Forces for a robust security framework that ensures Government Security Forces (GSF) provide pipeline and asset security.
