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Senate Kicks Against High Cost Of Oil Production

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Management of the Nigerian National Petroleum Corporation (NNPC), came under fire in Senate yesterday, over high cost of oil production ,
resulting into marginal profit of just $3 per barrel for the country.
This is just as senators kicked against the $3 marginal profit being made on a barrel by the Corporation and called on the federal government to diversify the Nation’s economy as quickly as possible .
Information on the high cost of oil production which is $21.2 per barrel , almost equaling $25 per barrel oil price benchmark fixed for the N10.509 trillion 2020 revised budget , came to the fore when
officials of the Corporation appeared before the Senate Committee on Finance .
Issues arose when its chief operating
officer ( Upstream) , Engineer Yemi Adetunji was called upon by the chairman of the Committee, Senator Solomon Olamilekan Adeola ( APC
Lagos West) to explain why cost of oil production in Nigeria is far higher than those of other oil producing countries of the world .
According to Adeola, while cost of oil production in Saudi Arabia is $4 per barrel and $3 per barrel in Russia, it is $21.2 per barrel in Nigeria, indicating very poor marginal profit of about $3per barrel based on new oil price benchmark of $25 per barrel .
The NNPC COO in his response, attributed the high cost of oil production to series of peculiarities ranging from security to crude oil theft .
But virtually all the members of the committee dismissed his submission as untenable , declaring that required actions must be
taken to address the abnormality .
Senator James Manager (PDP Delta South) in his remarks said the security problem mentioned by the NNPC COO , was not tenable as similar problems exist in all other oil producing countries without
high cost of production like Nigeria.
“Even the reason that he gave for the high cost of production per barrel I think they are not tenable because wherever oil is produced they have their own security challenge including even Saudi Arabia,
Iran Russia, they have their own unique security issues how is our own so peculiar that our cost of production is up to $21 per barrel.
“You also mentioned administrative issue, which are those administrative issues why are we different from the rest of the world. These are issues that the national assembly are supposed to take up,” he said.
Another member of the Committee, Senator Shaibu Gumau ( APC Bauchi South) , declared that the existing $21.2 per barrel high cost of oil
production and $25per barrel oil price benchmark was not a commonsensical economically for the country .

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