Nigeria’s crude oil production costs have raised concerns among industry experts, as the country reportedly spends no less than N1.57 trillion monthly—equivalent to N18 trillion annually—on oil extraction.
Data from the Nigerian Upstream Petroleum Regulatory Commission indicates that the minimum cost of producing a barrel of crude oil in Nigeria is about $25. With an average daily production of 1.4 million barrels, this translates to approximately $35 million in daily expenses, amounting to $1.05 billion per month.
At an exchange rate of N1,500 per dollar, the monthly production cost stands at N1.575 trillion, which significantly impacts the nation’s revenue from crude sales.
Experts argue that the cost of oil production in Nigeria is excessively high compared to other oil-producing countries. While Nigeria’s production cost ranges between $25 and $40 per barrel, Saudi Arabia operates at just $10 per barrel, and the United States at $24 per barrel.
In 2024, Chairman of the House of Representatives Committee on Finance, James Faleke, described Nigeria’s $48 per barrel production cost as the highest in the world, warning that such costs were eroding government revenue.
“If crude oil is sold at $80 per barrel on the international market, only $32 remains after covering production costs. This severely limits government earnings,” Faleke noted during a committee meeting with the Nigerian National Petroleum Company Limited (NNPC) in March.
Stakeholders are now calling for urgent measures to optimize production costs and enhance the profitability of Nigeria’s oil sector to support economic growth and government expenditure.