By Adewale Sanyaolu
The Minister of State for Petroleum Resources, Mr.Ibe Kachikwu, yesterday, lamented that Nigeria lost over $300 billion worth of oil and gas investments in three years.
The Minister stated this in his welcome address at the opening ceremony of the Nigeria Annual International Conference and Exhibition organised by the Society of Petroleum Engineers (SPE), Nigeria Council in Lagos.
Kachikwu explained that investors were moving their investment elsewhere as a result of the infrastructural deficit in the oil and gas industry to where the climate is more conducive for their businesses.
He said the infrastructure deficit gap in the country’s oil and gas industry is in the region of about $15 billion dollars, stressing the priority was to move away from public to private sector funding of the industry. The minister added that financing and development of infrastructure for the industry has become burdensome, hence the need to develop a new strategy.
He was worried that some of the challenges confronting the industry have led to massive job losses in recent time, leaving a lot of oil workers in the labour.
“When you look at the cost of production in Nigeria, it remains absolutely high. Our cost per barrel today is about $27 per barrel for JV (joint venture) fields. In Saudi Arabia, it is about $9. So we are way apart in terms of cost that anything that happens will hit us very hard,” Kachikwu said.
He said countries within the United Arab Emirates had cut costs very dramatically, making them as the lowest-cost producers in the world.
The Minister said, “Even though we have been singing over the last two years that we need to drive cost down, the current figure that I have shown me the numbers of last year are not showing me a major dramatic reduction in the cost of production.”
He said they would compel a reduction in the cost because “there is no way this country will produce oil at this sort of swelling prices that we see; there will be no margins left for this country.”
According to Kachikwu, only oil companies that are able to drive down costs will have a footage in Nigeria.
“For me, you rather leave the oil in the ground than produce at a cost that doesn’t make sense. So, cost is going to be a very high driver and that is certainly one area we are focusing on. We are working collaboratively with oil companies.
“But let’s make no mistake about it: If we cannot negotiate it down, we will compel it or we will stop the production; it does not make any sense,” he stated.