- Country to pursue low-cost production will low oil prices
- Nigeria to seek new funding models for its oil joint ventures
Nigeria plans to pump 2.4 million barrels of oil per day in 2016 as it pursues low-cost production to offset revenue losses from falling crude prices, Emmanuel Kachikwu, petroleum minister of state, said.
“We must bring down substantially the cost per barrel of oil in this country,” Kachikwu, who is also the head of the state oil company, told reporters on Thursday in the capital, Abuja. “In an era of declining price of oil it’s going to be very essential that we’re able to produce the most competitive oil in the market. We must be the lowest-cost producer.”
Africa’s biggest oil producer depends on exports of the commodity for more than 90 percent of its foreign earnings and two-thirds of government revenue. A 68 percent drop in the price of Brent crude from its 2014 peak, has seen government revenue plummet, piling pressure on the country’s currency, the naira. Kachikwu sees average prices of crude per barrel at $45 next year, higher than the budget estimate of $38.
With the government unable to fund new oil and gas investments in the face of limited income, new financing models are being considered for capital investments, Kachikwu said. A long-delayed reform bill for the oil and gas industry will be split into two parts, separating its fiscal and non-fiscal aspects for easier passage by lawmakers, he said.
Nigeria, which holds Africa’s largest gas reserves of more than 180 trillion cubic feet, will give low-tax incentives for investments to help boost gas revenue in the face of falling crude prices, Kachikwu said.
Nigeria is determined to revamp its refineries and make them work efficiently before deciding if they should be sold, Kachikwu said. The refineries with a combined capacity for 445,000 barrels per day only managed to operate at an average of 5 percent of their capacity in the first 10 months of this year, leaving a loss of 67.4 billion naira ($338.6 million), according to a report published by the owner, Nigerian National Petroleum Corp.
“We can’t sell the refineries in their current state because they’ll be sold as scraps,” he said. “We have to get the refineries to work. If they don’t work, we close them down.”
For an average daily consumption of 40 million liters of gasoline, Nigeria has paid subsidies of more than 1 trillion naira this year to maintain a fixed price, according to the petroleum minister