Abuja — The Nigerian National Petroleum Corporation, NNPC, Wednesday, confirmed the price war currently going on in the international crude oil market, noting that Saudi Arabia were giving discount of $8 and Iraq $5 respectively, to their off-takers in some locations.
In a statement in Abuja, Group Managing Director of the NNPC, Mallam Mele Kyari, who was speaking at the Central Bank of Nigeria, CBN, Round Table discussion, stated that this meant that when crude oil sold at $30 per barrel, countries like Saudi Arabia was selling at $22 per barrel and Iraq selling their crude at $25 per barrel.
He noted that due to the uncertainties of the global crude oil market, countries that produce at the cheapest price would remain in the market while jurisdiction with high cost of crude oil production would not be able to cope with the competing prices.
Kyari further stated that the NNPC was ready to strategically put in place measures that would alleviate the cost of crude oil production in Nigeria to create market for Nigeria’s crude and make Nigeria a choice destination for Foreign Direct Investment, FDI.
Kyari added that at the moment, the cost of crude oil production in the country was within the range of $15 to $17 per barrel, adding that some leaders in the industry, such as Saudi Arabia’s cost of production is between $4 and $5 per barrel.
Furthermore, Kyari declared that the Coronavirus pandemic was taking its toll on the Nigerian economy, stating that currently, the country is having difficulties finding buyers for about 50 cargoes of crude oil and 12 Liquefied Natural Gas, LNG, cargoes.
Kyari also warned of serious economic challenges as a result of the falling crude oil price, while he called on government at all levels, captains of Industries and the organized private sectors to brace up for the new low regime of global crude oil prices.
He added that realistic estimates must be made to reflect the current realities of the crude oil market.
Kyari, however, stated that the NNPC was working round the clock to increase the countries daily crude oil output to three million barrels per day and shore up the country’s crude oil reserves to 40 billion barrels.
He said, “Due to the Coronavirus pandemic, Nigeria has about 50 cargoes of crude oil that have not found landing. This implies that there are no off-takers for them for now due to drop in demand.
“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 abrupt collapse in demand associated with the outbreak of coronavirus.”