Mele Kyari, the
group managing director of the Nigerian National Petroleum Corporation (NNPC),
says Nigeria would be out of business if the price of crude oil drops as low as
$22.
Kyari was speaking
on Wednesday at a consultative roundtable meeting organised by the Central Bank
of Nigeria (CBN).
The roundtable was
themed “Going for Growth 2.0”.
He explained that
about 12 cargoes of liquefied petroleum gas (LPG) cargos got 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,” NAN quoted
him to have said.
“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.”
“Iraq dropped its
price by five dollars and Saudi Arabia by eight dollars in some locations. So,
when your crude oil sells at $30 and you’re dropping it by eight dollars, 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 dollars, that means we’re out of business.”
Kyari said reality
began to dawn on the country after the oil market slump on Monday.
He said that when
the oil market collapsed, everything would collapse completely adding that oil
was the only commodity whereby when the price goes up, beneficiaries would
panic.
In her remarks,
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”.
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