As a fall out of the dwindling oil prices, the country may stop deep water operations because of its high uneconomical value.
Mr Muda Yusuf, the Director General of Lagos Chamber of Commerce and Industry (LCCI) disclosed this at an event in Lagos recently.
According to him “Recently we had a meeting with Oil Producers Trading Sector (OPTS) and they told us that for now more than 5% of deep water operations are already uneconomical to operate. They are not talking about the price, the issue is that at the current price, they are not able to cover their cost for some deep water oil well operations, at $20 per barrel we don’t know how many of our oil wells will be economical to operate”.
Mr Yusuf who was represented at the event by Mr Vincent Nwani, the Director of Advocacy of LCCI said that the country will start feeling the impact of the falling oil prices more in the next five to six months.
He further adviced that like some Middle Eastern Countries, who have started making plans and preparations for the fall of oil to $20 per barrel, Nigerian should also start making plans towards that direction so that if it eventually happens, she will not be caught unawares.
Mr Ayo Teriba, the Chief Executive Officer of Economic Associates (EA) in his speech said that the oil sector contributed N10 trillion out of the N80 trillion of the country’s economy, so drop in it should not affect the country to this extent.
He said “Nigeria’s economy is N80 trillion strong, it is the biggest in Africa. Out of that N80 trillion, only N10 trillion came from the oil sector”.
He listed crop production, trading and manufacturing as contributing more to the economy than the oil sector, “ so why should fall in oil make the country broke” he queried.
He answered himself by saying that “we are the biggest economy in Africa, but we are the only one crying, South Africa’s economy is smaller than our own but they get more revenue than us because they diversified their revenue generating avenues unlike us that centralize our own on oil”.
He enjoined the government to develop other avenues of revenue generation so as not to be adversely affected like this in case of any eventuality.