Stakeholders have raised concerns over the country’s production costs, noting that Nigeria has the highest personnel cost among global operators, thus making it difficult to produce oil at a profitable price of below $10/barrel. According to them, many operators in the country spend 50 per cent of their cash flow on personnel costs, thus accounting for why some still produce at a high rate of $93/barrel, in a low oil price regime. However, representatives of the international and indigenous oil companies expressed concerns about the sustainability of achieving the $10/barrel production cost, considering costs incurred from vandalism of crude oil assets like pipelines, and security costs from protecting oil barges. Indeed, Nigeria’s bid to reduce the production cost in the face of volatile prices, trade war as well as challenges posed by COVID-19, may remain elusive unless the country addresses critical issues. It is not possible,” Kyari said, adding that the oil business may shutdown especially if the price of oil goes below $30/barrel for a long time.

Source: The Guardian June 12, 2020 04:30 UTC