Mele Kyari, the Group Managing Director of the Nigerian National Petroleum Corporation, has urged Nigerians to prepare for more tough times in few months following the crash in the prices of crude oil due to the outbreak of coronavirus.
Kyari gave the advice at a consultative roundtable meeting organised by the Central Bank of Nigeria in Abuja on Wednesday.
The roundtable has its theme: “Going for Growth 2.0.”
Kyari explained that about 12 Liquefied Petroleum Gas cargos got stranded globally because they had no hub due to abrupt collapse in demand associated specifically with coronavirus.
He said: “It has also hit other sectors from the production stage, which is the liquid crude.
“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 $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.
“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, that means we’re out of business.”
According to Kyari, with the oil market slump on Monday, the reality on ground is beginning to dawn on the country.
He said when the oil market collapses, everything would collapse completely, adding that oil was the only commodity whereby when the price goes up, beneficiaries would panic.
He added: “Coronavirus has brought several issues, especially in the financial sector, as there is decline in consumption.
“As it stands, there is a global demand of 100 million barrels per day and the spread is affecting the demand.
“We can take oil production to three million barrels if we are determined, but the problem still remains that we have a huge challenge, which is the capacity to finance oil development in Nigeria.”