The Group Managing Director of the Nigeria National Petroleum Corporation, Mele Kyari, has said that there is no cause for alarm over the current situation in the global oil market, saying that the US $0 price has no capacity to impact Nigeria’s oil production.
Crude oil has crashed to its lowest in over a decade since the outbreak of the COVID-19 pandemic, causing several economies to suffer.
The NNPC boss said:
That is not real crude oil price. That is the traders’ paper figure just showing the detail at the close of their business for the month. You would have observed that it has changed this morning (Tuesday). This is because they are not sure of the storage facilities for their stock of products they have.
He stated that the situation, which reflects the current position in the U.S market, does not have any direct impact on the price of the Brent crude oil blend, which rose to about $28 per barrel before dropping to the current price of to $26.24 a barrel on Tuesday.
Usually, the spread between OPEC price and the other prices vary by about $8 to $9. When that is deducted from the prevailing price, we have the real price in the market. But, today, Brent is about $28 per barrel. If $8 or $9 is deducted, we will know what the real price is today.
But, it’s really nothing for us (Nigeria) to worry about at all. Like I said the other day, the market will still change and rebound after the OPEC output cut. We will have to wait and see what is going to happen. It is just the close of the market month.
Further debunking claims that the current situation would have a telling effect on the Nigerian economy, The GMD NNPC said that oil production is usually a factor of the availability of the market for the product.
He explained that there is a drastic drop in the price of crude oil at the internal oil market and there is the problem of storage facilities, which has forced traders to show inactivity.
Kyari noted that storage facilities would become available and crude oil price will rebound, while also debunking reports that Nigeria has shut in its oil production as a result of the current situation.
The NNPC Chief said Nigeria achieved the highest oil production capacity recently, with the country approaching about 2.44 million barrels per day.
He further stated that the country has to scale down the production, considering that ultimately it has nowhere to take the oil to during this period of coronavirus pandemic.
We have to cut down, whether with or without OPEC output cut deal. We have to reduce our oil production level because we do not have where to take the oil to, till the situation improves. The impact of the crisis is global and not on Nigeria alone.