Economy: Panic As Saudi Crashes Oil Price To $22

NIGERIA’S ECONOMY FACES IMMINENT COLLAPSE – NNPC

By Bayo Bernard, Business Editor

The Nigerian National Petroleum Corporation, NNPC is seriously bleeding for lack of buyers in the international oil market for the nation’s crude.

No fewer than 50 vessels of crude are now stranded on the high sea as a result of  lack of sales according to the government-owned oil company.

Same with the Nigerian Liquefied Natural Gas company, NLNG whose effort to sell 12 gas laden oil vessels have proved abortive in the last few weeks, due to global economic crunch resulting from the spread of the deadly Coronavirus also known as Covid 19, which has plunged the price of crude to as low as $28 per barrel.

Few days ago, the President Muhammadu Buhari’s government set up a committee to advise his administration on the $57 oil bench mark in the 2020 Budget,

Except the situation is reversed quickly, pundits say another economic recession awaits in less than few weeks.

The Group Managing Director of the NNPC, Mallam Mele Kyari stated on Wednesday, at a round table organized by the CBN that emergency measures were necessary to save the country from plunging into another recession, the second in less than five years.

Kyari said “Due to the Coronavirus pandemic, Nigeria has about 50 cargoes of crude oil that have not found landing. This implies that there are no off-takers for them for now due to drop in demand.

Today, I can share with you that there are over 12 stranded LNG cargoes in the market globally. It has never happened before.

LNG cargoes that are stranded with no hope of being purchased because there is abrupt collapse in demand associated with the outbreak of coronavirus.”

The situation has become so precarious for Nigeria as an oil dependent nation, he said, adding that oil big majors are reducing the price of crude to attract buyers.

He said in the face of the global pandemic, countries like Saudi Arabia and Iraq, for instance were giving as much as $8 and $5 discount respectively, to their off-takers in some locations, a situation that has reduced a barrel of crude to between $22 per and $25 per barrel.

He explained that it’s difficult for countries like Nigeria to compete when big oil nations are prepared to crash the price to attract more sales.

He further stated that production cost for the Nigerian crude at $15 to $17 is higher than that of Gulf countries NNPC, which is between $4 and $5.

Meanwhile, the Saudi authorities, on Wednesday said it was increasing its OPEC oil output by 2m barrel a day.

This development, analysts say could plunge further the price of crude and more frustrating situation for small oil players like Nigeria.