10th February 2025
Nigeria’s crude oil production costs remain among the highest globally, with the country spending approximately N1.57tn monthly and N18tn annually to extract crude. The cost of production ranges between $25 and $40 per barrel, far higher than Saudi Arabia’s $10 per barrel and other oil-producing nations.
Industry experts attribute the high costs to insecurity, oil theft, outdated infrastructure, and inefficient operations. According to NNPC’s Group CEO, Mele Kyari, insecurity adds a premium to production costs, while experts highlight pipeline vandalism, environmental concerns, and outdated facilities as key challenges.
The House of Representatives Committee on Finance previously reported that Nigeria’s production cost reached $48 per barrel, the highest globally. This has significantly reduced revenue despite crude oil sales of N50.88tn in 2024. If the cost remains high, a large portion of oil revenue will continue to be lost to production expenses.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has set a target to reduce costs to $20 per barrel to improve Nigeria’s competitiveness in the global oil market. Experts urge the government to conduct a transparent cost audit, address security concerns, modernize infrastructure, and improve efficiency to boost profitability and attract investment.
Despite these efforts, stakeholders warn that without urgent reforms, Nigeria’s high oil production costs will continue to erode economic benefits and hinder national growth.
