OpeOluwani Akintayo
Lagos — London-based Public Relations Agency, Argus Media has said Nigeria’s upstream sector will see a rise in investment flows as oil prices rise, especially if prices hit $200 per barrel.
James Gooder, VP Crude and African Markets, Argus made this known during a media workshop organised by the Major Oil Marketers Association of Nigeria, MOMAN last week.
According to Gooder, Nigeria will be one of the highest gainers of high crude oil prices, owing to the fact that the country houses high grade crude variety.
“High crude oil prices will see more willing investors trooping to invest in the country’s upstream sector”, he said while delivering a lecture on ‘Fuel pricing in international market and Nigeria’.
He further explained that Nigeria has one of the lowest crude oil production costs globally, hence, investors will at this time record more profits than they did when prices were at their lowest.
“Nigeria’s Bonny Light is currently $2 above Brent, which means that the market crude is favourable for Nigeria, however, unfortunately, the country does not have a functional refinery, and has to rely on importation for its petrol.”
Ongoing war between Russia and Ukraine, and how it affects Nigeria, he said that the world is currently reluctant to buy Russia’s crude, hence crashing the country’s price $30/b below Brent.
“Currently, the world is shying away from Russian oil for fear of sanctions. This gives an opportunity for a country like Nigeria to quickly make more gains as importers of Russian crude are looking for alternatives”, he said.
Russia is a major exporter of diesel as well as crude and other oils.
He said aside from the Russian/ Ukraine war; market volatility and unpredictability, rising covid-19 cases in China and high diesel prices are what are driving current prices.
“Due to high prices, the incentive is to sell more crude now and not keep them in storage. Europe is a key source of West Africa’s fuels, but Europe also relies on import, particularly diesel. Since Europe must pay up for alternatives, that means higher prices for Nigeria and its neighbours”, he said.
American multinational investment bank Goldman Sachs had last week warned; that oil prices hitting $200 a barrel would send the U.S. economy into a recession.
In a new note on Thursday, Sachs said oil at $200 will increase the 2022 recession odds.
“We estimate that it would take a sustained oil price increase to $200 per barrel to produce an income shock similar in magnitude to those that precipitated the 1974 and 1979 recessions — and this would significantly increase the 2022 recession odds,” Goldman Sachs chief economist, Jan Hatzius said.
Although oil prices had surged towards $140 a barrel at the start of the Russia-Ukraine war, prices soon slid lower.
Brent crude oil on Monday at 10:30AM Nigerian time slightly rose to 104.94 per barrel after a previous closing price of 104.75 amid concerns on a new spate of sanctions on Russia by the West.
Prices for Brent crude oil have more than doubled compared to this time last year.
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