Minister of State for Petroleum Resources, Mr. Timipre Sylva, has said that Nigeria’s comfort zone in terms of oil prices stand between $70 and $80 per barrel, adding that the barrel unit price which hit $105 yesterday does not excite Nigeria.
Oil prices jumped to an all time high yesterday (Thursday), with Brent rising above $105 a barrel for the first time since 2014 before easing, following Russia’s attack on Ukraine. There were exacerbated concerns about disruptions to global energy supply. Russia launched an all-out invasion of Ukraine by land, air and sea in the biggest attack by one state against another in Europe since World War Two.
In an interview with Bloomberg Television, Sylva argued that Nigeria’s controversial fuel subsidy regime, which would gulp N3 trillion this year, coupled with its inability to ramp up production to meet the quota allocated by the Organization of Petroleum Exporting Countries (OPEC) have combined to limit the gains from the oil price hike.
The minister blamed the inability of Nigeria to activate the oil wells it shut down when OPEC instructed producing countries to cut production as well as the lack of investment in the upstream sector for the country’s inability to increase production.
At the moment, Nigeria is losing at least 300,000 bpd to its refining capacity challenges.
“I’m hopeful the 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.
“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,” the minister stated.
Sylvia stressed that more investments would be needed to ramp up production, but regretted that foreign investment inflow were drying up for Nigeria.
“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.”
On the way forward, Sylva the African energy group are looking at how to set up an energy bank. “Also, we’re looking at how we can rally multilateral funding into financial institutions.
“We are talking to Afreximbank. We’re working with other African producers to try to rally some funding for our sector in Africa, because we cannot continue to depend on funding that’s not coming.”