Nigeria, Africa’s top oil producer, says its short-term goal is to make its oil and gas industry more competitive, attract more investments and expand production to three million barrels per day (bopd) by 2023. Oil production in Nigeria slumped to 1.17 million barrels per day in December 2020, in compliance with cuts directed by OPEC and allies.
“We need to agree on terms that will give us a more competitive environment. We should find a way of producing oil cheaper at the largest volume possible, given
the circumstances and future of oil itself, and of course, given our requirements and needs,’ declared Vice President Yemi Osibanjo, in a recent speech to stakeholders in Abuja.
With oil prices persistently low, oil producers with lower costs of production have become more attractive to investors. The longterm survival of producers will depend on their competitiveness. “Today, we have one of the highest production costs in the world. You will be surprised that some assets (in Nigeria) are producing oil at as high as $60 per barrel, or even beyond that,” noted Mele Kyari, Group Managing Director at state-owned Nigerian National Petroleum Corporation.
“But there are also assets that produce oil for as low as $9 per barrel. So, we have this wide range of production costs in our environment, clearly linked to inefficiencies. The overall result is that we are producing oil at an average of $34 per barrel. This is not acceptable.”
The NNPC expects to bring production costs down to around $10 per barrel by the end of 2021. It is ambitious but a doable target, in the opinion of the state oil company chief. Despite its 32 billion oil reserves and conservative 200 TCF of proven natural gas resource, Nigeria has struggled to attract investment in the past decade. Officials say the country attracted only 4 percent of $75 billion oil and gas investments in Africa in the past four years (2015- 2019), due mainly to the delay in passing the reform -driven Petroleum Industry Bill (PIB) into law, according to the Lagos Chamber of Commerce and Industry. “This underscores the need to create a competitive environment to attract investment in the oil and gas sector,” noted Dr. Muda Yusuf, Director- General of LCCI.