The Nigerian National Petroleum Corporation (NNPC) has said 50 cargoes of Nigerian Crude oil is stranded on the international market due to the effects of Coronavirus.
According to the national oil corporation, there are no off-takers for these crude supplies signalling a significant drop in demand due to the Coronavirus pandemic.
The NNPC also revealed on Wednesday that an additional 12 cargoes of Liquefied Natural Gas (LNG) were also stranded on the global market which has seen a price drop similar to that of the Gulf War era.
In reaction, the Group Managing Director of NNPC, Melle Kyari told stakeholders that Nigeria must become competitive in the global market by reducing the cost of crude oil production.
“Today, I can share with you that there are over 12 stranded LNG cargoes in the market globally. It has never happened before. LNG cargoes that are stranded with no hope of being purchased because there is an abrupt collapse in demand associated with the outbreak of coronavirus.”
While driving home this view, he noted that Saudi Arabia and Iraq had given discounts to off-takers in certain locations.
He explained that the implication of this discount meant these countries sold their crude oil below the international bench mark.
He then expressed confidence that the NNPC was in a position to alleviate the cost of crude oil production in the country. Stating further that a reduction in production costs will attract foreign investors to the Nigerian oil industry.
On the present situation of things in the industry, Kyari revealed that the cost of crude oil production in Nigeria was between $15 and $17 per barrel.
While in Saudi Arabia it was between $4 and $5 per barrel.
He therefore concluded that present uncertainties in the global crude oil market will shift attention to countries that sell cheap oil while countries who sell at an expensive rate will not be able to compete.
He therefore called on government and the private sector to brace themselves for a new era of low global crude oil prices because realistic estimates must be made to reflect current market realities.