Ibe Kachikwu, minister of state for petroleum, says aging pipelines are responsible for the reduced crude oil output recorded in July.
The minister made this known on Thursday while speaking on the sidelines of the launch of the $200 million Nigerian content intervention fund and memorandum of understanding signing between Nigerian Content Development and Monitoring Board (NCDMB) and Bank of Industry (BOI).
Kachikwu said oil production, excluding condensates, was slightly below 1.8 million barrels per day in July.
“We continue to have challenges, some of our pipelines are old, so these are basically technical. They are not militancy-induced stoppages, but they are basically maintenance-induced stoppages,” he told Reuters.
Crude oil production, which fell in 2016 as a result of attacks on the oil facilities, recently increased to 1.8 million barrels per day after the attacks ceased.
In his speech, Kachikwu said the NCIF would address funding challenges which hamper the growth of indigenous manufacturers and assist in meeting the target of reducing the cost of production in the oil and gas sector.
“Over the years, Nigerian companies have found it difficult competing with their counterparts from jurisdictions where funding is accessible for 5% or less as compared to our market where bank lending rates hover around 20%,” he said.
“Some Nigerian banks are still unable to provide long-term financing required by the local supply chain to build needed capacity; the banks also lack sufficient knowledge of the oil and gas sector. The pedigree and operating model of the Bank of Industry (BOI) is expected to close this gap.
“At the SPE conference in Lagos weeks ago, I directed all players in the sector to work assiduously to cut the cost of producing a barrel of oil, which current stands at $32/barrel. I am optimistic that the NCI fund, which will be accessed at a single digit interest rate, with a tenor of five years, will help in this regard.”
When asked if Nigeria would join the production cuts agreement by the Organisation of Petroleum Exporting Countries at the November meeting, Kachikwu responded: “I can’t disclose that.”
While attending the 172nd OPEC meeting, which held in Vienna, in May, Kachikwu had said Nigeria had no problem joining the OPEC cut as long as production hits the catch point.
During an announcement of some details of the proposed 2018 budget, Udoma Udoma, minister of budget and national planning, had said the nation hopes to produce 2.3 million barrels per day at $45 per barrel of oil.
The minister said condensates contributed 450,000 bpd to Nigeria’s production in July