Ibe Kachikwu, minister of state for petroleum resources, has urged indigenous oil and gas companies to reduce their production costs in order to get approval for projects.
Kachikwu was speaking during the opening ceremony of the 2019 Nigeria Oil and Gas Opportunities Fair (NOGOF) in Yenagoa, the Bayelsa state capital on Thursday.
According to him, although the current cost of oil production is around $23 per barrel, some companies in joint venture agreements with Nigerian National Petroleum Corporation (NNPC) are producing at $15 per barrel.
He said the private sector should target production costs of below $15 dollars per barrel, adding that this will lead to an inflow of foreign direct investment.
“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,” he said.
“This is because any unbelievable cost of production basically impacts the revenue stream of the country.
“We need to start finding out how companies awarded recognition are doing, and why are the others not going in that direction.
“However, excuses of the environment being different or absent infrastructure can no longer hold water, because there are a lot of countries with a peculiar situation as ours that are producing oil at relatively lower levels.
“One of the mandates that I am giving the Department of Petroleum Resources (DPR) is that as we begin to look at new projects, the cost at which we are going to produce is going to become critical to our ability to approve those projects for you… so, it is becoming a major front-burner item.”