Chineme Okafor in Abuja with agency report
Nigeria is now the third most expensive country to produce oil in the world with a production cost per barrel of crude oil put at $28.99.
According to a Wall Street Journal’s (WJS) survey of 12 notable oil producers, Nigeria stands behind the United Kingdom (UK) and Brazil in the production cost analysis. Both countries produce a barrel of oil at $44.33 and $34.99 respectively.
The survey which was obtained from the WSJ in Abuja said production in Nigeria was more expensive than it is in the United States despite US use of expensive technology which combines horizontal drilling and a technique known as hydraulic fracturing to mine its Shale oil.
A further breakdown of the cost shows that oil producers in Nigeria pay $4.11 as taxes on a barrel of oil they produce, while $13.10; $8.81 and $2.97 go into capital spending, production costs, as well as administration or transportation cost.
It said for the US shale, $6.42 goes into taxes, while $7.56; $5.85; and $3.52 are used as capital spending; production costs; and administration and transportation.
Also, with a tax of zero dollar, the survey stated that Saudi Arabia spends the least amongst the 12 sampled countries in the world for the extraction and trade of crude oil.
The WSJ survey said: “Saudi Arabian crude is some of the cheapest in the world to extract because of its location near the surface of the desert and the size of the fields.”
It further said: “That makes transporting those barrels an outsized piece of its costs, on a percentage basis, compared with countries where production costs are 10 to 20 times as high.”
According to the survey, with $3.50 in capital spending, $3 in production cost, and $2.49 in administration and transportation, producing a barrel of crude in Saudi Arabia costs just $8.98.
The figures however indicate that for every barrel of crude pumped by Nigeria, she nets about $20 profit since oil prices bounced back to levels above $48 or above. Saudi Arabia on the other hand could make as much as $40 or more at the same price level.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu had once said when oil prices were hovering at prices below $40 per barrel, that the country could still make some profits from its production.