The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, said that insecurity is the major reason for the high cost of crude oil production.

Kyari made this disclosure on Wednesday during the 2024 Faculty of Science Lecture at the Obafemi Awolowo University (OAU), Ile-Ife where he was a guest speaker.

The NNPCL Chief while speaking on the topic, “Energy Security, Sustainability and Profitability in Nigeria: Advances, Challenges and Opportunities” tried to dissect the challenges in the Nigerian oil and gas sector.

Kyari in his address also said that the high average cost of production per barrel was as a result of insecurity and other sundry issues.

“The reality is that the oil and gas industry behaves in such a way that wherever you put your money to create value, a number of things must come into play,” he said.

“First, you must have a secure environment. Security means everything to the oil and gas sector. Insecurity doesn’t stop the oil and gas industry from operating.

“They (oil companies) operate in Afghanistan, any country that you know there’s conflicts, but what it does is that it adds a premium to the cost of production.”

The NNPCL GCEO added that in Nigeria today, when businesses come here from other countries, they know what would cost $100 in one country but one would probably want to add another $30 in this country.

Kyari said this is because they think that the risks of exposure to these assets are very high and secondly, there must be a fiscal environment that supports it.

According to him, this means that Nigeria’s laws, business of taxation, collection of government dividends from the business, in any form, whether taxes, royalties, company income tax, companies will always sum it up for them to say, “Do I put $100 in this country?”
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