Minister Warns of Economic Crisis As Oil Price Tops $100

By Fola James

Nigeria’s Minister of State for Petroleum Timipre Sylva has warned that the rising price of crude oil portends serious economic crisis for the country.

Crude oil price has surged to as high as $100 per barrel, the highest in eight years in the face Russia’s aggression against Ukraine on Thursday, a development many analysts said will further worsen the cost of energy worldwide.

The situation also comes at a time efforts are being made by the NNPC to stabilize petrol scarcity across the major cities in the country. The government owned oil corporation said on Wednesday it has supplied over 300 million litres to mitigate the problem, even as marketers of the product now sell as much as N250 per litre.

But the minister said the situation could get worse if oil prices continue to surge.  

Ordinarily, surging oil prices is supposed to be a plus for an oil producing country like Nigeria, but the minister said oil production is currently below the OPEC requirement, adding that the federal government is trying to ramp up investment in the sector.

He said the situation in the country has made foreign direct investment in the country very difficult.

According to him, the federal government is hopeful that oil prices “will move around, maybe $80, maybe $70. We are hoping it will come down to somewhere around $70 to $80, which will be sustainable for us to the end of the year.

“We are working hard on that (production increase). What happened to us was the fact that we had to cut back at the time, and, of course, in such a way you can’t really cut back mathematically’, he said.

The minister further stated that “so, you want to cut back 100,000 barrels that you shut out, maybe we’ll shut down about 200,000 to 300,000 barrels. So at the end of the day, we over-complied because we just couldn’t achieve it mathematically.

“In trying to cut down, we cut down too much. And now to come back, it’s not been easy for us to get the wells back to production.”

“It’s not very easy these days to get the investments in. We really are not able to meet up our quota now. But I believe that we’re working so very hard to ensure that, because we are not happy at all.

“I mean, with the kind of prices we are seeing. We are obviously not happy about it. So we would like to definitely be back on track by later this year. It’s not been very easy to get investments. A lot of people can’t get investments into the sector”, Sylva said.