With a cost of production of $28.99, Nigeria is now the third most expensive country to produce oil in the world.
Nigeria stands behind UK and Brazil, who produce a barrel of oil at $44.33 and $34.99 respectively.
According to Wall Street Journal’s survey of 12 notable oil producers, production in Nigeria is more expensive than it is in the US, despite US Shale use of an expensive technology which combines horizontal drilling and a technique known as hydraulic fracturing.
A breakdown of the cost shows that oil producers in Nigeria pay $4.11 as taxes on a barrel of oil, while $13.10, $8.81 and $2.97 go into capital spending, production costs, administration/transportation.
For the US shale, $6.42 goes into taxes, while $7.56, $5.85, $3.52 are used as capital spending, production costs, administration and transportation.
With a tax of zero dollar, Saudi Arabia is the cheapest country in the world for the extraction and trade of crude oil.
“Saudi Arabian crude is some of the cheapest in the world to extract because of its location near the surface of the desert and the size of the fields,” the Wall Street Journal writes.
“That makes transporting those barrels an outsized piece of its costs, on a percentage basis, compared with countries where production costs are 10 to 20 times as high.”
With $3.50 in capital spending, $3 in production cost, and $2.49 in administration and transportation, producing a barrel of crude in Saudi costs just $8.98.
These figures show Nigeria has been making about $20 on every barrel of crude pumped since oil prices bounced back to levels above $48, while Saudi has continually made $40 at the same time.