• Thursday, May 30, 2024
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BusinessDay

Cost of oil production in Nigeria 40% higher, says Seplat

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 The high cost of production of by indigenous oil companies is hampering their ability to perform at optimal level.

Lamenting the high cost of oil production and exploration in Nigeria is now put at about 40 percent higher than what it costs in other oil producing countries. Austin Avuru, managing director of an indigenous independent oil production and exploration company, Seplat Petroleum Development Company Limited, said that the situation has become a disincentive to the operators of marginal oil fields.

Avuru, who spoke during the Petroleum Technology Association of Nigeria’s investment forum at the ongoing Offshore Technology Conference in Houston, Texas, said high production cost is a serious disincentive to indigenous marginal operators.

During the panel session, which focused on the Petroleum Industry Bill (PIB) and the challenges surrounding it, Avuru noted that the majority of the stakeholders had focused on fiscal terms of the bill while neglecting the high cost of exploring and producing oil in the country.

He said: “Today, the cost of oil exploration and production in the country is 40 percent higher that what it should be. We want a PIB that will address this issue.”

Bryant Orjiakor, the chairman of the company, also lamented the non-passage of the bill after 12 years in the National Assembly and contributions from stakeholders. He however pointed out the need for a post-PIB era that would be favourable to every operator in the industry especially the indigenous companies.

He said: “As an independent, we are looking for a PIB that will be fair enough, such that the fiscal terms will not get worse for the indigenous operators than as it is today.

“Quite a lot have been said about the PIB, very many of them centring on fiscal terms. Obviously, there are non-fiscal concerns by stakeholders and I think the time has come for stakeholders to look into these non-fiscal issues.

He said that the Federal Government deserves to have the right take from the oil and gas industry while creating an enabling environment and making it possible for the independents, the multinationals and the marginal fields operators as well as indigenous and local service providers to get fair takes too.