The Nigerian National Petroleum Corporation (NNPC) on Wednesday, March 11th, 2020 raised an alarm regarding the imminent crisis as a result of low oil prices and urged Nigerians to get ready for tougher times ahead.

The alarm came as the coronavirus outbreak continues to cause devastating issues in the global economic landscape, particularly by creating fiscal and planning distortions in gas-exporting and crude oil economies.

The state-owned NNPC’s Group Managing Director, Mallam Mele Kyari, gave the insight on the consequences of coronavirus pandemic on March 11th at the Roundtable Parley with the Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, themed “Going for Growth 2.0” in Abuja. He specifically urged millions of Nigerians to “prepare for trouble” as oil prices continue to lower while demands continue to increasingly decline.

The warning by Kyari couldn’t have landed at a more propitious time in the 2020 fiscal year, considering the foreign exchange earning implications of the coronavirus pandemic for Nigeria’s budget implementation and expected outcomes for the citizenry.

Kyari said,

The potential of coming out of the coronavirus will be a long while to come, at least three months. So, prepare for trouble for three months…We have a backlog of production that needs to be resolved. We will have the impact of coronavirus for a while.

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 an abrupt collapse in demand associated with the outbreak of coronavirus.

Today, we have about 50 oil cargoes that have not found landing. It means that the traders have purchased it but they don’t know where to take it to.

The Nigerian National Petroleum Corporation’s GMD said some oil producing countries, such as Saudi Arabia had given a discount of $8 on its crude oil price, in a bid to remain afloat amidst the ravaging effects of the coronavirus outbreak.

He said,

Iraq gives $5 to their off-takers in some locations.

According to him, when crude oil is sold at $30 per barrel, nations like Saudi Arabia sell it at $22 per barrel and Iraq sells its own at $25 per barrel.

However, Kyari said the NNPC was not taking the back seat, saying that the corporation is taking several measures to lessen the cost of crude oil production in the country. He said the cost of producing crude oil in the country is within the range of $15 to $17 per barrel, adding that a minimized production cost would create a market for Nigeria’s crude and make the country a choice destination for foreign direct investment.

Justin Nwosu

Justin Nwosu is the founder and publisher of Flavision. His core interest is in writing unbiased news about Nigeria in particular and Africa in general. He’s a strong adherent of investigative journalism, with a bent on exposing corruption, abuse of power and societal ills.