The management of the Nigerian National Petroleum Corporation ( NNPC), came under fire in Senate Monday over high cost of oil production.
The reduction has allegedly resulted into marginal profit of just $3 per barrel for the country.
This is as senators kicked against the $3 marginal profit being made on a barrel by the corporation and called on the federal government to get the nation’s economy diversified as quickly as possible.
Information on the high cost of oil production which is $21.2 per barrel , almost equaling $25 per barrel oil price benchmark fixed for the N10.509 trillion 2020 revised budget , came to the fore when officials of the corporation appeared before the Senate Committee on Finance .
Trouble for the nation’s cash cow started when its Chief Operating Officer ( Upstream) , Engineer Yemi Adetunji was called upon by the chairman of the committee, Senator Solomon Olamilekan Adeola ( APC Lagos west) to explain why cost of oil production in Nigeria is far higher than those of other oil producing countries of the world.
Senator Adeola said while cost of oil production in Saudi Arabia is $4 per barrel and $3 per barrel in Russia, it is $21.2 per barrel in Nigeria , indicating very poor marginal profit of about $3per barrel based on new oil price benchmark of $25 per barrel .
The NNPC COO in his response , attributed the high cost of oil production to series of peculiarities ranging from security to crude oil theft .
But virtually all the members of the committee dismissed his submission as untenable, declaring that required actions must be taken to address the abnormality .
Specifically, Senator James Manager (PDP Delta South) in his remarks said the security problem mentioned by the NNPC COO, was not tenable as similar problems exist in all other oil producing countries without high cost of production like Nigeria.
“Even the reason that he gave for the high cost of production per barrel, I think they are not tenable because wherever oil is produced, they have their own security challenges, including even Saudi Arabia, Iran and Russia.
“You also mentioned administrative issue, which are those administrative issues. Why are we different from the rest of the world? These are issues that the National Assembly are supposed to take up”, he said.