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From Uche Usim
Contrary to wide belief that the rising crude oil prices at the international market translates to higher income for the federal government, the Minister of State, Petroleum Resources, Mr Timipre Sylva, has stated that Nigeria cannot celebrate because the anticipated gains have been eroded by its inability to meet the oil production quota assigned by the Organisation of Petroleum Exporting Countries (OPEC).
The Minister, at a press briefing to announce the forthcoming Nigeria International Energy Summit in Abuja, said: “It is always not something to celebrate because when prices go high it means that there other competing production that will also start revving up, for instance, the shale producers in America will now find it profitable.
“Whereas if the prices are at a certain level, it will not be profitable for them to produce their shale. So once oil prices go up to a certain point, you are encouraging a lot of production that would otherwise not be in the market.
“So, we are not happy when prices go up to a certain level. We believe that prices should be at a certain point which would be optimal for us, but suboptimal for the shale producers. That is why we like to have that balance.
“In Nigeria right now, we are a net importer of petroleum products and when the prices of crude oil goes up it also affects the prices of petroleum products.
“So, for us who are the net importers, it is also not very good for us. What we are saying is that if you are going to produce more and you get more dollars from your production, then it gives you more money for your imports.
“But if you are now producing less and then you still have to make sure that the Nigerian market is supplied fully with petroleum products, then you will see that there will be a shortfall.
“That is why we would like to have our production now to be at the point where we will be getting enough, but at this point, our production is not very optimal. So at the end of the day we are not necessarily making a lot of gains”, the Minister explained.
He revealed that plans were afoot to grow Nigeria’s crude oil production in the interest of the nation’s economy.
OPEC raised Nigeria’s oil production target for March 2022 to 1.718 million barrels per day, indicating from the 1.701 million barrels per day target that was approved for Nigeria in February.
Brent, the crude against which Nigeria’s oil is benchmarked, sold for $103/barrel on Thursday, a leap recorded for the first time since 2014 following the invasion of Ukraine by Russian forces which heightened anxiety in the global energy space.
Meanwhile, Nigeria missed its crude oil output target for January 2022, pumping 1.46 million barrels per day against a target of 1.683 million bpd as approved by OPEC.
