Kachikwu said government had reduced the cost of crude production to 23 dollars per barrel from about 32 dollars, adding that some companies in the joint venture with NNPC had already driven the cost down to 15 dollars.
The minister said henceforth, approval for projects in the petroleum industry would be based on the cost of producing oil and gas, noting that efforts are on to further ensure the cost was brought down to below 15 dollars per barrel.
"The minister said it became important, especially as many were considering divesting and charting new paths.
According to him, changes in the global oil and gas industry are presently challenging the present exploration and investment strategies. This, he said, was because, “oil is fast becoming a degenerating asset with alternative sources of energy taking over and attracting new investments”.
Kachikwu said while the world was moving on from fossil fuels, Nigeria has yet to take advantage of the opportunities in the sector and design strategies to harness advantages of renewables.
The minister urged indigenous firms to take over and stop playing safe if they would benefit from the opportunities availed through new trends in the industry."
Translation - we need to earn money for the country NOW while the opportunity still exists
“He said: “The ministry is going to come up with a benchmark to analyse and compare companies who do business in Nigeria and what cost of production they are running. This is because any unbelievable cost of production, basically impacts on the revenue stream of the country.”
Translation - Some of you are hiding other expenses in your production costs and we aren’t going to keep letting you get away with it because it costs the country money.
Who knows if anything will actually come out of it. The very last part of the article underlines something that has always impressed me about Nigeria (and left me disgusted with many other oil and gas producers across the world) -
“According to the minister, government had also ensured increase in production activities, and completion of Egina Project and AKK Pipelines among others, and was also working towards ensuring zero gas flare by 2020.”
Gas flaring gives the whole industry a deserved bad name, imo. Hats off to Nigeria who have always had a massively progressive approach to stamping out the practice.
He seems to have forgotten that oil and it’s many derivatives has many industrial uses besides transport and power generation. Yes, we may all be driving round in EVs in a few years and using more renewables for power generation but there’s a lot more to the story. We’ll be needing the black stuff for a very long time yet so Nigeria need not worry. I reckon first to go will be offshore exploration which is getting too expensive again ( comparatively speaking)
Global demand is still growing and I doubt there are many countries that still burn oil for electricity generation (so one major use already disappeared).
BUT, from a country’s strategic point of view they do need to be looking ahead twenty of thirty years, especially countries like Nigeria where two thirds or more of their government’s revenues come from oil and gas. You only have to look at 2016 to see the trouble they got into when the oil price fell so far.
They can count themselves lucky that U.S. shale has hit so many problems with environmentalists moving to block new pipelines and terminal developments, despite Trump passing new laws to help force them through. If it wasn’t for those holdups OPEC would be limiting production far more to keep the price around $65 (WTI) which in turn will limit Nigeria’s output.
Nigeria (and other oil/gas dependent economies) really need to get as much cash in as they can now and use it to seed other industries. Not so easily done in a country as poor as Nigeria and with such a big population as opposed to places like Norway and UAE that have massive sovereign funds built up to buffer themselves against the day when oil demand does start to drop.
That drop could be precipitous IF there is a break-through in the cost of battery storage technology, the current holy grail for power provision.
So, I think a far-sighted speech from the Minister, but good luck to him keeping such sensible policies on track in Nigeria!
If Eroton isn’t bringing home the bacon in serious style now, with this backdrop, it never will. Sle shareholders, at least the remaining public ones outside the cosy relationship with ToscaFund, need clarification of progress with clear facts and figures.
Still waiting for the web site to let us know how many of the 11.5% of shares not in the hands of Tosca and friends are actually in the open market or with a sizeable holder.
Divmad eroton have just started the drilling campaign they were suppose have started 2 years ago due to having to wait for nnpc cash call, this is all now paid so their first well is a producer so we await those figures and a new well is on it’s way to start drilling, production at the show OF was 60k aday plus gas and any new production figs from asko. The new fso will also be in play this year too.
Bonny light trading at $71pb