• 6 minutes Can the World Survive without Saudi Oil?
  • 10 minutes Saudis Threaten Retaliation If Sanctions are Imposed
  • 15 minutes Closing the circle around Saudi Arabia: Where did Khashoggi disappear?
  • 17 mins U.N. About Climate Change: World Must Take 'Unprecedented' Steps To Avert Worst Effects
  • 3 hours Saudis Pull Hyperloop Funding As Branson Temporarily Cuts Ties With The Kingdom
  • 10 hours Judge Approves SEC Settlement With Tesla, Musk
  • 3 hours WTI @ $75.75, headed for $64 - 67
  • 5 hours How High Can Oil Prices Rise? (Part 2 of my previous thread)
  • 5 hours UN Report Suggests USD $240 Per Gallon Gasoline Tax to Fight Global Warming
  • 7 hours Iranian Sanctions - What Are The Facts?
  • 8 hours EU to Splash Billions on Battery Factories
  • 5 hours China Thirsty for Canadian Crude
  • 10 hours Porsche Says That it ‘Enters the Electric Era With The New Taycan’
  • 10 hours Gold price on a rise...
  • 11 hours Saudi Crown Prince to Trump: We've Replaced All Iran's Lost Oil
  • 6 hours Shell, partners approve huge $31 billion LNG Canada project. How long till Canadian Federal government Environmentalates it into the ground?
Will The U.S.-Saudi Spat Upend Oil Markets?

Will The U.S.-Saudi Spat Upend Oil Markets?

Saudi Arabia appeared to threaten…

Move Aside Lithium – Vanadium Is The New Super-Metal

Move Aside Lithium – Vanadium Is The New Super-Metal

Lithium took investors across the…

Low Oil Prices Threaten Nigerian Oil Fields

The price of oil, now in the neighborhood of $30 per barrel, is getting close to its production cost in Nigeria and soon may lead to the shutdown of some of the country’s oil fields, according to some energy executives and financial institutions.

The Central Bank of Nigeria’s latest figures show that the price of Nigeria’s crude, Bonny Light, has dropped to $29.47 per barrel. And several financial services companies, including Bank of America, Merrill Lynch, City Group, Goldman Sachs and Morgan Stanley say it could drop further to $20 per barrel.One oil executive, Alhaji Abdullahi Bukar, told the Nigerian newspaper Punch that the current price isn’t much more than it costs to extract the oil.

“The unit technical cost of many of our producers is not far from $30 per barrel,” said Bukar, the project director for the Uquo gas field development, a joint venture project by Frontier Oil Limited and Seven Energy. “So many companies are in trouble.”

Related: Is This The Riskiest Oil Stock In The World?

According to Bukar, extracting a barrel of oil in Nigeria costs between $24 and $25 on average but sometimes will cost more. “For some fields, the production cost is well above $25, maybe $28,” he said. “For some fields it is well below $20 and $25. Many of the older fields … have got high production costs.”

The low oil price also threatens to delay several deep-water projects planned off Nigeria’s coast, long a mainstay of Nigerian production. Adeola Elliott, the CEO of Petrosystem Nigeria Ltd, said, “What [international oil companies] have done now is to just keep maintaining the facility they have now and producing what they [are] producing now. There is no more new investment.”

Nigeria is the leading producer of oil in Africa, and relies on its oil for most of its revenues from exports and its national budget. In the past several years its average production has ranged between 1.9 million barrels of oil per day and 2.3 million barrels per day.

Related: Oman Offers to Slash Oil Production If OPEC Follows Suit

In 2015 it produced an average of nearly 2.28 million barrels per day, but President Muhammadu Buhari says he expects it to fall to no higher than 2.2 million barrels per day in 2016.

Despite such concerns, Tam David-West, who served as Nigeria’s oil minister in 1984 and 1985, said there’s little if any reason to worry about the country’s oil industry.

“It is nonsense to panic over the current oil price,” David-West said in a telephone interview with The Sun, another Nigerian newspaper. Instead, he said, the government should focus on strict budget discipline and crackdown on corruption in the oil industry.

Related: Iran’s Eagerness To Export Sees Oil Tanking Again

David-West said that in 1984, when he was oil minister, the price of Bonny Light fetched no more than $30 per barrel on the world market, and even plunged to $10 per barrel in April of that year. Nevertheless, the country’s leadership – coincidentally Buhari’s military government at the time – remained calm and kept the country from the brink of economic disaster.

“All of the fears are not necessary,” David-West said. “People should not put the nation into unneces¬sary anxiety.”

David-West said he’d already reminded Buhari of this oil-price crisis of three decades ago, and added that “the president agreed with me.”

By Andy Tully of Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News