In a paradox, Nigeria traumatized about rising crude oil prices; “We are obviously not happy about it,” says minister

It is not beyond imagination that Nigeria’s fuel subsidy regime, which relies on imported products, could take a further hit, with rising oil prices. Also, Nigeria has not sufficiently ramped-up production to meet the quota allocated by the Organisation of Petroleum Exporting Countries (OPEC), and this would tend to limit gains which higher oil prices bring.

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Timipre Sylva, Nigeria’s minister of state for petroleum: The Nigerian government yesterday expressed worry over the rising crude oil prices, saying the increase is not good for the country.

The Nigerian government yesterday expressed worry over the rising crude oil prices, saying the increase is not good for the country.

While bemoaning declining investments in Nigeria’s petroleum sector, the government is considering floating an African Energy Bank to curb the continent’s dependence on Europe, Asia and America for investment capital.

Speaking during an interview with Bloomberg Television, Nigeria’s Minister of State for Petroleum Resources, Mr. Timipre Sylva, maintained that Nigeria’s comfort zone in terms of oil prices was between $70 and $80 per barrel.

While not explaining how Nigeria hurts when oil prices exceed the region of $80, Sylva claimed that Nigeria was not gaining anything from the soaring prices.

Deriving from rising hostilities between Russia and Ukraine, Brent, Nigeria’s benchmark, on Tuesday hit $99.03, the highest in the last nine years, almost hitting the magical $100.

It is not beyond imagination that Nigeria’s fuel subsidy regime, which relies on imported products, could take a further hit, with rising oil prices. Also, Nigeria has not sufficiently ramped-up production to meet the quota allocated by the Organisation of Petroleum Exporting Countries (OPEC), and this would tend to limit gains which higher oil prices bring.

Minister Sylva stated, “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.

Calling for additional investments, Sylva said:  “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.”

He said, “So we’re looking at how we can get our African energy bank set up. 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.”

The minister said: “This is what we’ve been saying all the time. I mean that we have not been investing in the oil and gas sector for too long. And we expected that this was going to happen at some point, because there will be a gap, because now that gap cannot be filled by renewables.

“And that is because you are not also investing that quickly into renewables, and you’re not developing renewables that quickly. So now there is a gap. And in addition to this gap, you have all the geopolitical tension.

Responding to question on supporting in filling the gap in gas supply to Europe, as a result of tensions in Ukraine, Sylva said he was not aware of discussions with the United States for Nigeria to increase supply of gas to Europe on the back of the Russia.

Sylva said, “We are actually having those kinds of conversations with Algeria, we are building a pipeline, the Trans Sahara gas pipeline that is going to take up our gas all the way down to Algeria to Europe.

“We are also planning a pipeline to take our gas to Morocco. So we are planning two pipelines, one to Algeria, to Europe through Algeria, and one to Europe through Morocco.

Nigeria would not be stampeded to the energy transition, will join…

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