The Action Congress of Nigeria (ACN) Sunday urged the Federal Government to cut the cost of governance and diversify the economy to save the nation's economy from collapse.
The party said in a statement that the economy was under threat because of the precarious state of the oil industry, the country's main source of revenue.
It warned that unless the government cut the astronomical cost of running a bloated government and shore up the production of oil, it might soon run out of funds to pay its bills.
ACN said in the statement signed by its National Publicity Secretary, Alhaji Lai Mohammed, that the red alert was based on four empirical evidence, including high cost of production, crude theft, drop in oil reserves and the challenge posed by discovery of alternative energy sources.
The party observed that Nigeria is presently not making as much new oil discoveries as other countries.
ACN, therefore, urged the Federal Government to rise to the challenges and save Nigeria's economy from collapse.
It said: "Any delay could mean that those in charge of the country's affairs would not have enough time to change course as the ship of state heads for the rocks."
The party listed the danger signals as "the cost of oil production, which has skyrocketed from $4 per barrel in 2002 to $35 presently; the massive corruption in the oil sector, with oil theft and sabotage leading to lost production and costing Nigeria some $6 billion annually in crude theft; the sharp fall in the discovery of new oil and gas reserves due to the low investment in the sector, and the most serious of all, the challenge posed by alternative sources of global supply of oil and gas."
The party said the cost of oil production rose from only $4 per barrel in 2002, to $7 per barrel in 2005 and from the $12 per barrel at the outset of the Yar'Adua/Jonathan administration in 2012, it had risen to $35 per barrel by 2012.
According to the ACN, during the just-concluded Nigeria Oil and Gas Conference in Abuja, the mind-boggling cost hike was attributed to the cost of security in the Niger Delta, put at $16 per barrel.
"In other words, the gains recorded from ending militancy in the Niger Delta due to the amnesty programme have been wiped off by the cost of maintaining the 'peace'.
"Here is how Shell Nigeria MD, Mutiu Sunmonu, described the situation: 'Operating in the Nigerian oil and gas environment can be long and tortuous with costs at the high end of the global scale. There are a multitude of security related issues that have to be dealt with on a daily basis.
'In the recent past, militancy has simply been replaced by industrial scale oil theft and sabotage. We, and others, have had to shut-in significant production; spend huge amounts on replacing and repairing hardware and deploying massive resources to clean up spills.'
"Contrary to what the FG (Federal Government) may say, this warning is not about crying wolf but is actually borne out of a patriotic fervour devoid of politicking, which is the usual refrain of this government when alerted to its shortcomings.
"We will like to be proven wrong, but this will depend on uncommon and monumental effort, rather than on the basis of the usual canned response from the government," it said.
On the discovery of new oil and gas reserves, ACN said the disastrously-low level of exploration activity in Nigeria was supported by the statistics released by the US Department of Energy for deepwater discoveries from 2009 to 2011 in which Brazil alone contributed some 40 new discoveries or 20 per cent of the global total, US and Australia contributed 10 per cent each, countries like Ghana making nine new discoveries or five per cent of the global total, while Nigeria had only four discoveries or two per cent of the global total during this period.
ACN explained that the paltry discovery of new oil and gas reserves is due to the low investment in the sector, which needs to attract $15 billion annually in capital investment, up from the present $3 billion, in order to remain a significant global oil supplier and a respected player in the Organisation for Petroleum Exporting Countries (OPEC).
It said, however, that all those challenges pale into little significance when placed against the challenge posed by alternative sources of global supply of oil and gas seriously - that is shale oil and shale gas.
"The US has more than doubled its estimates of recoverable domestic shale gas resources to some 827 trillion cu. ft. (23 trillion cum), more than 34 times the amount of gas the US uses in a year. Together with supplies from conventional gas sources, the US may now have enough gas to last a century at current consumption rates.
"Last month, the agency released a similar announcement in respect of shale oil to the effect that California's valleys alone hold as much as 15.4 billion barrels of shale oil, which companies were hitherto unable to reach because the oil exists in pockets of rock that were expensive to reach before the present advancements in tracking technology. Similar announcements are being made in Europe and parts of Asia.
"For the first time in nearly a decade, the US has regained the position of being the world's largest producer of natural gas and soon also oil. Thus, in less than five years, the US has gone from seeking new sources of oil and gas overseas to being self-sufficient. Industry experts believe that shale oil and shale gas will revolutionise the industry-and change the world-in the coming decades. It will prevent the rise of any new cartel and alter oil geopolitics.
"The announced objective of the US government is to drive down oil prices from the current $100 per barrel to $50 per barrel within two years. If this happens, which is very likely in view of the alternative sources, Nigeria, with a cost of production of $35 per barrel, would immediately go out of business, with dire consequences for an economy that thrives largely (if not solely) on oil," the party said.
ACN stated that the signs of imminent trouble were already visible for those willing to see, adding that the Brass LNG Project has been unable to take Final Investment Decision (FID) because of the collapse in the US LNG market and rising costs, while a similar situation faces the Olokola LNG Project.