The Group Managing Director of the NNPC, Mele Kyari, says Nigeria is on course to realising its targets in the oil and gas industry.
The coronavirus pandemic has ravaged the global economy and impacted the international oil market. But, the Group Managing Director of the, Mele Kyari, says Nigeria is on course to realising its targets in the oil and gas industry.
The Minister of Finance has already hinted Nigeria is already heading towards another recession. There is no better way of saying it. We are having less money coming in and more things to do. It’s a simple relationship. Ultimately, the economic downturn is tough. As a country, we are managing it the best way we can. It’s tough. We are making changes to ensure we survive through this, like every country. No country is immune from it. None has a perfect answer.
What that means in terms of government revenue is declining inflow. The 2020 Budget was initially premised on $57 to the barrel. By March, it became clear the benchmark was not sustainable. In Saudi Arabia, one can produce oil at less than $5. Their reservoirs are very different from ours. One can lay the oil pipelines on the surface and nobody will tamper with it. The environment there is different from the Niger Delta.
For instance, the personnel cost in this country is higher than any other jurisdiction in the world. This is unbelievable. PT: How is the crisis impacting oil production? And how is Nigeria responding to the OPEC output cut agreement?: Since our decision to participate in the OPEC+ output cut regime, we have a commitment to bring down our o production to 1.412 million barrels per day between May and June and 1.495 million BPD between July and December 2020. Thereafter 2021, in January until April 2022, we will be producing 1.579 million BPD.
We know that this will be the right time to kick in the 3 million barrels per day agenda. This is very possible and realistic. But, whenever crude oil price goes down, this is the right time to focus on solid minerals development. Solid mineral behaves the opposite way as crude oil market because of its own inherent stability that crude oil does not have.
But, there are still issues. We still have 71 per cent of crude oil pipeline breaches this year alone, and losses in excess of $48million, from about $755million in 2019.Kyari: As you must have heard, we have found oil in the Benue Trough. This is a monumental milestone. This is the result of over 40 years of efforts in the Chad Basin and other inland locations, like the Anambra platform.
PT: Recently, you announced the end of fuel subsidy, which signal led the commencement of the deregulation of the downstream sector of the petroleum industry. But, critics say it appears we cannot proceed without a legal framework as the PIB is still not passed. How do you respond to this?: You don’t need the PIB to go ahead with the deregulation. This is purely a policy issue.
NNPC kept the stock of all the petroleum products. Between 2015 and 2016, only a few companies imported PMS into this country. They were doing it at a cost, including the integrity of the company itself, talking about allegation of fraud in the oil and gas sector and the fuel subsidy regime at the time.
When some people say deregulation should be included in the PIB, I don’t agree. It is a policy matter. We do not need a PIB to liberalise the prices of petroleum products. It was never in any law that we must have the price of petroleum products in the law. It does not exist. If the product is produced here, market forces will naturally prevent you from selling at any price that you want.
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