50 oil cargoes, 12 LNG cargoes stranded in global market ― NNPC

Revenue generation by the Federal Government from oil sources to fund the 2020 budget may have been placed in jeopardy as Nigeria shops fruitlessly for off-takers of its crude oil and liquefied Natural gas (LNG) at the international market.

This follows a drop in demand for crude oil and liquefied natural gas at the international level due to the Coronavirus pandemic placing huge pressure on the nation’s economy which largely depends on oil revenue.

Already not less than 50 cargoes of crude oil have not found landing due to absence off-takers of the product. Also in the market without off-takers are 12 cargoes of Liquefied Natural Gas.

Group Managing Director of the Nigeria National Petroleum Corporation (NNPC), Mele Kyari, yesterday made this disclosure at the Central Bank of Nigeria Round Table discussion in Abuja.

He explained that there was an abrupt collapse in demand for the products as the world battles Coronavirus, a statement signed by Samson Makoji, Acting Group General Manager, Group Public Affairs Division, NNPC said.

According to the statement, Kyari called on Federal and state governments to brace up for tougher times ahead, if the pandemic persists and urged the private sector to join in making realistic budgets that would reflect the current realities.

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The Statement reads in part, “Mallam Kyari called on government at all levels, captains of Industries and the organised private sectors to brace up for the new low regime of global crude oil prices, adding that realistic estimates must be made to reflect the current realities of the crude oil market.”

Nigeria had pegged its budget estimates at $57 per barrel as crude oil benchmark for the 2020 fiscal year; N305 to a dollar in exchange and adopted 2.18mbpd for the 10.2trn budget estimates. The rate per barrel has plummeted from over $67 to about $30 per barrel.

The NNPC GMD told the meeting that in the face of the current realities over the Coronavirus global pandemic, countries like Saudi Arabia have given a discount of $8 and Iraq $5 to their off-takers in some locations meaning that when crude oil sells at $30 per barrel, countries like Saudi Arabia is selling at $22 per barrel and Iraq selling their crude at $25 per barrel.

The GMD said the NNPC was working round the clock to increase the countries daily production to 3million barrels per day and shore up the crude oil reserves to 40billion barrels.

Mallam Kyari stated that at the moment the cost of crude oil production in Nigeria was within the range of $15 to $17 per barrel, adding that some leaders in the Industry such as Saudi Arabia’s cost of production is between $4 and $5 per barrel.

He noted that due to the uncertainties of the global crude oil market, countries that produce at the cheapest price would remain in the market while jurisdiction with the high cost of crude oil production would not be able to cope with the competing prices.

This reality he noted has tasked the Nigerian National Petroleum Corporation (NNPC) to strategically put in place measures that would mitigate the cost of crude oil production in Nigeria to create a market for Nigeria’s crude and make Nigeria a choice destination for Foreign Direct Investment.