The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Malam Mele Kyari, has said Nigeria has no cause to be apprehensive over the slump in the United States crude oil futures, saying the development is not a reflection of the reality in the global oil market capable of impacting Nigeria's oil production.
This is coming as former Vice President Atiku Abubakar has called on the federal government to build a strategic crude oil reserve with massive storage capacity.
Kyari, who spoke with Premium Times yesterday said the country has no cause to be apprehensive as the US oil price has no capacity to impact on the production of Nigeria's Brent crude.
"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," the NNPC boss said.
He said the situation, which reflects the current position in the US market, does not have any direct impact on the price of the Brent crude oil blend, which rose to about $28 per barrel before dropping to the current price of to $26.24 a barrel on Tuesday.
"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.
On whether the current situation has any impact on Nigeria's oil production, he said that is a different issue, pointing out that oil production is usually a factor of the availability of the market for the product.
He said now that there is a drastic drop in the price of crude oil at the internal oil market, there is the problem of storage facilities, which is why traders have taken that position to show inactivity.
Meanwhile, Atiku has called on the federal government to build a strategic crude oil reserve with massive storage capacity that can hold at least a month's worth of Nigeria's OPEC production capacity.
Atiku, in a statement he personally signed yesterday, said, "If we build such infrastructure, we will not have to sell our crude at a production loss. We will be in a position to stockpile the product in our reserve until such a time as prices improve.
"The global oil market continues to suffer from the vagaries of the coronavirus pandemic, as prices continue to crash due to the sudden, massive and unexpected drop in worldwide demand for crude oil.
"The futures market for commodities is a turbulent one, due to unforeseen hazards that come and go. Today, it is COVID19; tomorrow, it will be something else.
"It is time for Nigeria to protect her economy from being tossed to and fro by circumstances beyond our control. We must assert our sovereignty, by exerting more influence over the global trade in crude oil, and other features".
Atiku observed that other countries take similar measures to protect their economy, citing North American and European countries as example.
Those countries, he said, have such internal controls to protect almost every sector of their economy, stressing that Nigeria cannot be left behind.
Atiku said the country must be in business in the best interest of the economy.
"I would also strongly recommend that we discuss with our partners in the Organisation of Petrol Exporting Countries, and obtain a concession, whereby we can defer our daily quota, such that when we undersell, due to a crash in the price of crude oil, we can oversell when the prices stabilise, subject to the condition that we balance out our quota".