The Nigerian National Petroleum Corporation (NNPC) has warned Nigerians to prepare for more trouble ahead following the crash in the price of crude oil.
Group Managing Director, of (NNPC) Mr Mele Kyari, sounded the warning in Abuja on Wednesday, at a consultative roundtable meeting organised by the Central Bank of Nigeria with the theme “Going for Growth 2.0”.
Kyari disclosed that “today there are over 12 LPG cargos stranded globally because they have no hub because of the abrupt collapse in demand associated specifically with coronavirus.”
“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 up for harsh economic conditions in months ahead, even if the price of crude oil in the international market jumps to over $50 from the current $30/barrel.
Kyari while dissecting possible scenarios confronting the Nigerian economy 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 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.”
That he said “is a huge problem that can be accommodated in some production environment like in Saudi Arabia. Today, the best of our production system is $15-17 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.