By Hamilton Nwosa(Head, The New Diplomat’s Business and data tracking desk)
Minister of State for Petroleum Resources, and former governor of Bayelsa State, one of Nigeria’s oil-rich State, Chief Timipre Sylva has pledged Nigeria’s readiness and commitment to deliberations on output cut as proposed by the Organization of Petroleum Exporting Countries (OPEC ). The proposed talks is scheduled for next Thursday .
In a statement signed by the Minister, he said the “Government of Nigeria wishes to assure the Nigerian and international communities that it is watching developments in the oil and gas industry with keen interest’, stressing that “Nigeria is very mindful and appreciative of the role of Saudi Arabia and other members of the OPEC family” in the on-going subject matter.
He explained: “As Nigeria’s Minister of State for Petroleum Resources, I will continue to monitor the impact of COVID-19 on our, and the global, economy. In our consultations with global industry stakeholders in the lead up to the OPEC+ meeting scheduled for Thursday, April 09, 2020, the Nigerian Government will take a position that is in the best interest of our short term and long-term economic forecast.”
This is coming as Oil prices took another nose-dive earlier today following weekend postponement of a meeting by Russia and Saudi Arabia. The meeting which was scheduled for Monday was postponed as both Russia and Saudi Arabia escalated further hostilities, accusing each other of being responsible for Oil price crisis. International energy reports indicate that the meeting has however been rescheduled for Thursday. Also expected at that meeting are Norway and Alberta Province of Canada.
Earlier today, reports had quoted the head of Russia’s sovereign wealth fund Kiril Dmitriev as disclosing that Russia and Saudi Arabia were “very, very close to a deal”. The spike and escalation in hostilities between both countries have had terrific crippling effects on many Oil producing countries including Nigeria.
But it is not most certain if a deal could be closed in the coming days as data tracked by The New Diplomat’s economic intelligence desk show that Russia may have technically considered an Output cut, with the proviso that the United States also cut. Experts and global energy analysts project that this development might “make an agreement tricky as the U.S. has not signaled any readiness to join any cuts”.
However, in his statement, Nigeria’s Minister of State for Petroleum Resources, Chief Sylva said it is well known that Nigeria has always collaborated with key OPEC members such as Saudi Arabia in maintaining a balanced position that has helped to make OPEC one of the most successful global institutions in recent history. Nigeria, he said, intends to maintain this team spirit even as it takes into account, the position of OPEC strategic allies such as Russia.
He added: “As always, the driving force of our OPEC policy is first the stability of our national economy as well as the stability of the global economy which is heavily dependent on OPEC and its strategic partners, popularly referred to as OPEC+. Nigeria, like the rest of the world, has been hit by the Global Pandemic, COVID-19, and is prepared to join the rest of the world in making the necessary sacrifices needed to stabilize the crude oil market; and to prevent what is likely to be a major global economic meltdown.”
Recall that The New Diplomat had recently projected that with escalating glut in oil supplies and stretched storage capabilities, exacerbated by Saudi Arabia increase in oil production even in the face of dwindling global demand, global energy experts have come up with grim outlook that the world may be heading towards Oil price crash as low as $17 per barrel in the coming weeks if urgent talks are not held.
For Nigeria, Africa’s most populous nation, whose externally generated revenue is about 97% dependent on earnings from crude oil, the grim outlook is further compounded by the recent downgrading of the country’s credit rating from stable to negative by Standard & Poor (S&P).
The global rating agency cited Nigeria’s failing foreign-exchange reserves, slow GDP growth, rising public debt, multiple exchange rates and external pressures impacting its creditworthiness as basis for its latest rating. With this latest development, experts say that all eyes are now on Nigeria’s Niger Delta, specifically the Delta creeks where influential de facto leader of the Niger Delta agitations, High Chief Government Oweizide Ekpemupolo aka Tompolo holds sway.
Recall also that the Federal government had recently revealed that Nigeria currently has about 50 cargoes of crude oil that have not found landing or off-takers due to increasing drop in demand. Managing Director of Nigeria National Petroleum Corporation (NNPC), Malam Mele Kyari who said this at a forum organized by the Central Bank of Nigeria(CBN) had disclosed 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 abrupt collapse in demand associated with the outbreak of coronavirus.”
It would be recalled also that Nigeria’s Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed had said Nigeria may slide into recession if the Covid-19 continues unabated for the next six months. She added: “ We are hopeful that this pandemic will be limited in time. If the pandemic lasts three months or less, we should be able to close the year with positive growth. But if it goes longer than that-six months, one year-we will go into recession.”
For many stakeholders in the volatile Oil rich Delta, it is time to maintain peace with all key stakeholders and the political leadership of the South-South zone driving the process in a sincere, transparent, all-inclusive and accountable manner. According to stakeholders ‘’ this would help guarantee stable oil production, ensure peace in the volatile, and help sustain existing production dynamics in order to preserve what is left of our already challenging national economy.”
