Nigerians were on Wednesday told to brace for tough times as the tumbling crude oil price continued to take its toll on the economy.
Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) Mele Kyari gave the warning in Abuja at a consultative roundtable organised by the Central Bank if Nigeria with the theme: “Going for Growth 2.0”.
Kyari said: “Today there are over 12 Liquefied Natural Gas (LNG) cargoes stranded globally because they have no hub because of the abrupt collapse in demand associated specifically with corona virus.
“It has also hit other sectors from the production stage which is the liquid crude. And as today with the Nigerian crude, we have 50 cargoes that have not found landing it means the traders have purchased it but they don’t know how to take it.”
He urged Nigerians to brace for harsh economic conditions in the months ahead, even if the price of crude oil in the international market jumps to over $50 from the current $30/barrel.
Dissecting possible scenarios confronting the Nigerian economy, the NNPC boss said: “While Nigeria’s oil producing competitors produce oil at a relatively cheaper cost, Nigeria’s production cost was still on the high side.”
According to him, “Iraq dropped their price by $5 and Saudi Arabia by $8 in some locations. So, when your crude oil sells at $30 and you’re dropping it by $8, it means that in the market, you’re selling it at $22.”
“It’s a huge problem that can be accommodated in some production environment like in Saudi Arabia. Today, the best of our production system is $15-17 a barrel, there are many countries whose cost of production is $30 and we’re one of them. So, when the price now goes to $22 and we’re producing at $30, we’re out of business.”
“Currently, in our situation, we have expectations, we have plans. The belief is that we can take production to three million barrels per day and also shift our reserves from the current status of $37 billion to $40 billion in the next three years.”
