The crash in crude oil price to about $42.5 per barrel and the likely cut in production by Nigeria should the Organisation of Petroleum Exporting Countries ask the country to do so will definitely affect the 2017 national budget, the Minister of Petroleum Resources, Ibe Kachikwu, has said.
He also stated that Nigeria would support all measures put in place by OPEC to ensure crude price stability globally, not minding if the cartel asks the country to cut down its oil production volume.
Kachikwu stated this at a press conference held at the headquarters of the Federal Ministry of Petroleum Resources in Abuja on Wednesday.
When asked if the crash in crude oil price and the likely call by OPEC for a reduction in Nigeria’s oil production would impact the implementation of the country’s 2017 budget, the minister replied, “In terms of the budget impact, definitely.
“But like you know, the Ministry of Finance is looking for ways to cover some of this shortfall and part of that is efficiency, like how to cut down our expenditures. So the budget will be impacted.
“But we are working hard at the Federal Executive Council to see how we can forecast or predict that sort of impact in order to see how we can cover them.”
The minister stated that Nigeria was currently producing 1.7 million barrels of crude oil per day, outside the volume of condensates produced by the country.
On the likely production cut by Nigeria, he said, “Serious members of OPEC will support the cuts when we are sure that we can have a stable and predictable production. Yes we’ve got 1.7 million barrels production daily, but it is still below the 1.8 million barrels used as benchmark for us at OPEC.
“But the reality is that this is a very difficult terrain and we’ve got to watch it for a couple of months to be sure that what you see is quite sustained. We will ultimately find stability in this market. Nigeria will do whatever it takes to help that stability.”
Kachikwu expressed hope that oil prices might stabilise later this month or in August, adding that conversations with other OPEC members would determine to what extent Nigeria would have to support in stabilising crude prices globally.
“I’m sure that by the time I have conversations with my other colleagues, we will determine at what timeframe we will see Nigeria coming in with a lot more predictive analysis of what our market is looking like and what we need to do to further help. Hopefully by then, we would have been out of the price uncertainties that we are seeing today,” he added.
On Tuesday, it was reported that Nigeria and Libya might be asked to cap their crude oil output soon in an effort to help re-balance the market, as the two countries had boosted oil production since they were exempted from the global cuts led by the OPEC and other producers.