The National Association of Energy Economists (NAEE) has called on the Federal Government to stop the exportation of Nigeria’s crude oil.
Its President, Prof. Wumi Iledare, said in a statement at the weekend that Nigeria’s 2.4 million barrels per day was not enough for its whole populace let alone exporting.
“The United States, with a population of about 300 million consumes 16 to 18 million barrels of crude oil per day. By implication, that shows that Nigeria has the capacity to consume more than the 2.4 million barrels it currently produces if the economic activities are functioning at near optimal level.”
The NAEE president, advised that Nigeria should not be exporting crude oil but use it as a source of energy. “Currently, Nigeria treats its hydrocarbons as a source of income instead of a source of energy that should be driving economic development and growth. The scenario is this: if the Nigerian economy is actually growing the way it is supposed to grow, the 2.5mbpd will be used by our economy and there won’t be any to export.
The country should target a production of 4 million barrels a day before thinking of exporting, he said.
“I foresee a situation where if we are going to have any oil export at all, we should be targeting at least 4 mbpd. If we are going to grow our GDP at 12 per cent yearly to be able to catch up with the world, we cannot use our oil for money; we should use our oil for power and 2.5 mbpd cannot generate the electricity that we need to grow our economy. Oil is an input of production and that is what it should be. If this economy expands, 2.5mbpd will not sustain it.”
Iledare maintained that at 4,000 megawatts, Nigeria was still not producing enough for its 170 million population.
The professor of energy economics ruled that government could not be the sole supplier of energy hence the need to create investment environment for investors to bring money.
He Said Government must also not regulate the price of energy without meeting the threshold for investment performance.
He therefore, called for policy consistency that should be coordinated by the office of the Chief Economic Adviser to the President.
He also called on the President to establish a council to design sustained roadmap for power generation in the country.
According to him, the absence of the council was a major missing link.
Iledare stressed that only an intellectual solution would solve the energy crisis and called on government to move away from seeking political answer to solve the perennial power outages.
“We need a working energy council to address the problems we have in Nigeria. It is not a political solution but an intellectual solution to a complex problem and energy is key to economic emancipation and we are toying with it”, he said.
Nigeria is presently struggling to regain market share after ceasefire by oil militants in the Niger Delta.
The country is expected to pump this month and November about 1.7-1.8 million barrels a day, up from a three-decade low of 1.39 million barrels a day in August. This is way below its usually 2.2 – 2.4 million barrels per day production.
As the oil market gets filled up with cheap oils competing for buyers, Nigeria was forced to cut the price of every type of crude it sells in an effort to regain share of the global energy market.
The cut in price comes at a time when NNPC said there’s a “huge” glut of cargoes on ground to be sold.
The Nigerian National Petroleum Corporation (NNPC) lowered by at least $1 a barrel its official selling prices (OSPs) for 20 out of 26 oil grades, according to pricing lists obtained by Business Times.
Qua Iboe, Nigeria’s largest export crude was reduced by the most since 2014.
The price reductions are due to a “huge cargo overhang” as the country attempts to regain market share, Mele Kyari, Group General Manager for the Oil Marketing Division at NNPC, said.
“It is a bearish signal for the light, sweet market,” Eshan Ul-Haq, principal consultant at KBC Process Technology Ltd., said, reacting to the news and referencing the types of crude Nigeria mostly pumps. “In order to capture a higher share of the market, OSPs have to come down.”
NNPC cut the selling price of Qua Iboe for November to a 17 cent premium to the benchmark dated Brent, according to the price list, from $1.07. It reduced the price of Bonny Light to a 7 cent premium and Forcados to a 41 cent discount to dated Brent.
Recall that Nigeria’s finance ministry, last week, said that declining oil production and export volumes due to militancy and large-scale crude theft, had cut government’s gross revenue in September by about it 12% from August to Naira 279.75 billion ($8 billion).
The ministry said that despite the rally in global oil prices averaging $48.43/b in June, Nigeria’s export volume declined by 1.15 million barrels in that month, resulting in a $46.52 million drop in oil export sales for the government. Oil exports account for about 80% of the Nigerian government revenue.