Emmanuel Ibe Kachikwu, minister of state for petroleum resources, says it is better for Nigeria to stop crude oil production than to produce it at a high cost.
The minister said this while speaking at the Nigeria annual international conference and exhibition organised by the Society of Petroleum Engineers in Lagos on Monday.
He said unlike other countries that have managed to reduce their production cost over the years, the cost of producing crude oil in Nigeria has remained high.
“When you look at the cost of production in Nigeria, it remains blatantly high. Our cost per barrel today is about $27 per barrel for JV (joint venture) fields,” he said.
“In Saudi Arabia, it is about $9. So we are way apart in terms of cost that anything that happens will hit us very hard.
“Even though we have been singing over the last two years that we need to drive cost down, the current figure that I still have, showing me the numbers of last year, have not shown me a major dramatic reduction in the cost of production.”
Kachikwu said only companies that could drive down costs would be given favourable consideration in the oil sector because “there is no way this country will produce oil at this sort of swelling prices that we see; there will be no margins left for this country”, he said.
“For me, you rather leave the oil in the ground than produce at a cost that doesn’t make sense.”
Oil prices hit a two-month high on Monday, with Brent crude trading at $52.90.
A global supply glut, which led to a drastic fall in oil prices, resulted in reduced national revenue and the country slipped into a recession in 2016, the worst in three decades.
The Buhari-led administration has intensified efforts to increase agricultural production and to reduce dependence on oil.