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NNPC deflates impact of falling oil price

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THE slump in United States crude oil futures below $0 per barrel is not a reflection of the reality in the global oil market capable of impacting Nigeria’s oil production.

  Group Managing Director of Nigerian National Petroleum Corporation (NNPC), MeleKyari stated this in a response to reported drop of U.S crude oil price to its worst level since New York Mercantile Exchange (NYMEX) opened oil futures trading in 1983.

  The drop was coming few days after Nigeria’s benchmark crude oil grade, Bonny Light, slumped to an average $12-$13 per barrel to heighten apprehension about Nigeria abandoning oil production amid declining prices. But despite recent intervention by the Organisation of Petroleum Exporting Countries (OPEC) and its allies to cut global crude oil, no significant improvement emerged in the oil market. Rather, crude oil prices continued on a downward swing with analysts saying that record output cuts by OPEC expected to take effect from May 1 needs some time to rebalance the market.

  According to Kyari, there is no cause to be apprehensive over the current situation as the US $0 price has no capacity to impact Nigeria’s oil production.

  “That is not real crude oil price. That is the traders’ paper figure just showing the detail at the close of their business for the month. You would have observed that it has changed this morning (Tuesday). This is because they are not sure of the storage facilities for their stock of products they have. Usually, the spread between OPEC price and the other prices vary by about $8 to $9. When that is deducted from the prevailing price, we have the real price in the market. But, today, Brent is about $28 per barrel. If $8 or $9 is deducted, we will know what the real price is today. But, it’s really nothing for us (Nigeria) to worry about at all. Like I said the other day, the market will still change and rebound after the OPEC output cut. We will have to wait and see what is going to happen. It is just the close of the market month,” he said.

  But NNPC said it would continue oil production despite the fall in price.

  The explanation came on the heels of the speculation that Nigeria had halted the production of the commodity which prices had fallen below its cost of production.

  Since the outbreak of the Coronavirus in China last year, the crude oil prices have sustained a steady decline until the last OPEC+ meeting resulted in the marginal increase of crude prices.

  With the high hope that the high price would endure, the Minister of State for Petroleum Resources, Chief Timipre Sylva, expressed optimism that the Federal Government could still earn as much as $2.8billion from the rise.

  He expressed hope that the Federal Government could still sustain its budget benchmark of $30 per barrel.

  The prices however plunged in the global oil communities into panic as they dip to about $11 per barrel on Monday.

  In a telephone interview, the Group General Manager of NNPC in charge of Public Affairs, Dr. KennieObateru said oil production is still going on as I know up to today.

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