Nigeria’s federal government has the increase in prices of global crude oil is not good for the country.
Timipre Sylva, minister of state for petroleum resources, who stated this in an interview with Bloomberg Television, amid rising crude oil prices in the global market on the back of Russia-Ukraine tension, said that Nigeria’s comfort zone in terms of oil prices was between $70 and $80 per barrel.
On Thursday, the global oil benchmark, Brent crude, rose over 5 percent to trade at $102.27 a barrel with escalating tensions between Russia and Ukraine.
The minister said Nigeria was not gaining anything from the soaring prices.
“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,” he said.
Last year, Nigeria agreed to voluntarily cut its daily crude oil production by 939,000 barrels between January and March after a meeting with the Organisation of Petroleum Exporting Countries (OPEC) and its allies.
Sylva said the inability of Nigeria to activate the oil wells it shut down when OPEC instructed producing countries to cut production as well as the lack of investment in the upstream sector is affecting the country’s ability to increase production.
He said Nigeria is losing at least 300,000 bpd to its capacity challenge.
“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 cut back mathematically,” he said.
“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.
“In trying to cut down, we cut down too much. And now to come back, it’s not been easy for us to get the wells back to production.”
According to the minister, a lot of additional investments would be needed to ramp up production, but he lamented that foreign funding was drying fizzling out for the industry.
Answering questions on the supply of gas to Europe, Sylva said he was not aware of discussions with the United States for Nigeria to increase the supply of gas to Europe amid Russia and Ukraine tensions. He noted that if it has to happen, it would take time and investment.
He said the country intended to begin supply to the continent through Algeria and Morocco in the near term.