The Group Managing Director of the Nigerian National Petroleum Corporation, (NNPC), Mele Kyari, has stated that rising crude oil prices will cause problems for resource-dependent countries such as Nigeria.
Brent Crude, the international benchmark of crude oil on Friday traded above $72 per barrel while US West Texas Intermediate (WTI) crude futures sold above $70 per barrel.
In 2021, oil prices have continued to surge, sustained by coronavirus vaccine rollout and supply cuts from the Organisation of Petroleum Exporting Countries (OPEC).
Kyari on Thursday at the virtual Citizens Energy Congress, tagged: “Securing a Sustainable Future Energy System through Strategy, Collaboration and Innovation”, described the increase in global prices of crude oil as a “chicken and egg”, situation.
He lamented that oil prices had started exiting the comfort zone set by the NNPC, and becoming a burden.
The NNPC boss put the comfort zone at $58-$60, saying that for the NNPC, anything above $70-$80 will create major distortions in the projections of the corporation and add more difficulties to the company.
Kyari expressed concerns that as the price of the commodity increases, buyers of Nigeria’s crude may be compelled to accelerate their investment in renewable sources of energy, thereby leaving the industry in a quagmire.
He noted that Nigeria will have no problems supporting the restoration of about 5.8 million barrels a day that the OPEC still has offline since the pandemic, due to the curbs in production quota imposed by the oil cartel.
He explained that adding that number to demand will stabilise and probably bring oil prices down to about $60 level or a little below $60, which he described as a comfort zone for every oil-producing company or country.
With declining investments in the oil sector, Kyari said that the world may experience an energy crisis in a short time if the current situation is not properly managed.
