Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr Mele Kyari, has warned that the country could get into trouble if the price of crude oil at the international market sells at $22 per barrel.
Speaking on Wednesday at a consultative roundtable meeting organised by the Central Bank of Nigeria (CBN) in Abuja, the oil expert said about 50 cargoes carrying the commodity have not found landing.
“As at 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,” Mr Kyari at the event themed Going for Growth 2.0.”
Speaking further, the head of the national oil company said, “Iraq dropped its 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.
“This is a huge problem that can be accommodated in some production environment like in Saudi Arabia.
“Today, the best of our production system is $15 to $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, that means we’re out of business.”
Mr Kyari further explained that about 12 cargoes of liquefied petroleum gas (LPG) cargoes from Nigeria were stranded globally because they had no hub due to abrupt collapse in demand associated specifically with coronavirus.
“It has also hit other sectors from the production stage which is the liquid crude,” he said.
Mr Kyari noted that after the oil market slump on Monday, a lot of worries became reality, saying that when the oil market collapsed, everything would collapse completely. He added that oil was the only commodity whereby when the price goes up, beneficiaries would panic.
In her remarks, Mrs Zainab Ahmed, the Minister for Finance, Budget and National Planning, said the market slump is a wake-up call for the country to look towards a life without oil.
Oil prices is registering one of the most volatile weeks in history when it crashed on Monday to around $35 per barrel, made some recovery on Tuesday, and returned below $35 on Wednesday.
As at the time of this report, the International benchmark futures, Brent Crude is trading negative at $33.60 per barrel, further adding worry to the country’s oil proceeds of which a $57 per barrel benchmark price was expected to support.
