By our reporter| The group managing director of the Nigerian national petroleum corporation (NNPC), Mele Kyari on Wednesday asked Nigerians buckle up and prepare for real tough times in at least the next three months.
The NNPC who gave the warning following Monday’s slide in crude oil prices over the growing impact of the coronavirus pandemic on the world economy, said his warning was based on his experience oh how the global oil markets works.
Kyari spoke at the Consultative Roundtable on the economy organised by the Central Bank of Nigeria (CBN).
He said, “Prepare for trouble for at least three months, even if the price of crude oil goes back to $58 per barrel, the situation will still be tough, because there is a backlog of production hanging that has to be resolved”.
“What that means is that we are going to have the impact of this low crude oil price for some time. The oil market is highly unpredictable. Nobody knows what is going to happen tomorrow.
“There are many forecasts. We said oil will be sold at about $60 per barrel this year. But we are already having $22 per barrel. Nobody knows what will happen next tomorrow.”
The anxiety generated by the sudden crash of oil prices, Mr Kyari noted, is as a result of the importance of oil in the global economy, “such that when crude oil prices collapse in the international oil market, everything else collapses”.
According to him, Nigeria has the capacity to meet the expectation of raising her oil production to three million barrels per day as well as increase her reserve from the current average of 36 and 37 billion barrels to 40 billion barrels in the next two to three years.
He said, “much as these are very high expectations that are very possible, Nigeria must continue to produce even at low prices”.
“The market operates in such a way that nobody knows what tomorrow will be. The assumption this year was that $60 per barrel as an average. Now, we are facing a declining situation we have not even seen the bottom.
“It is a huge challenge that creates a cycle of problems for the country that is so difficult to manage, as it involves a huge deficit that will radiate to all sectors of the economy, including the financial sector.
“Today, there are over 12 stranded LNG cargoes globally that have no hope, because there is an abrupt collapse in demand in the oil market associated to the coronavirus. It has never happened.
“This is also affecting other sectors, including liquid crude oil. Today, we have about 50 cargoes with Nigeria crude oil that have not found landing. This means traders have purchased them, but do not know where to take them.’
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