From Dennis Mernyi, Abuja
THERE was an air of optimism yesterday when Nigerian’s Minister of State for Petroleum Ibe Kachikwu reassured that the current crude price crash may just be a temporary set back which may end before December this year, Nigeria’s Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has predicted.
Kachikwu who declared that OPEC was not expecting crude oil prices to enter the region of $20 to $30 per barrel, predicting that the 2016 average would be between $40 and $50. “I am actually optimistic that 2016 would end on an average of 40 to 50 barrel type level, but the first quarter would be very rough.
“I don’t expect to see it (oil) going to the twenties, I expect it on the fringes of thirties for maybe a month, two months, I expect it to see it to begin to climb.” With oil at its lowest since 2003, OPEC members are calling for an emergency meeting to cut output in a bid to raise demand for oil, and subsequently raising the price of crude.
The price of OPEC basket of thirteen crudes stood at $25.76 a barrel on Tuesday, compared with $27.07 the previous day.
“I think a greater majority of the people, not necessarily the majority in terms of the volumes that they produce, but majority in terms of membership are beginning to feel like the time has come to sit back and have a meeting and dialogue again once more, without the kind of tensions that we had in Vienna,” he said.
Also querying the rationale behind the insistence of Saudi Arabia’s authorities to keep market share despite dwindling oil prices, he said it was a policy “gone too far”.
According to him, “for us that policy is going too far, we need to sit back and see, how can we balance the need to protect market share, with the survival of the business and the survival of the countries who run these businesses,” he said.
“There is a lot of energy around, and meeting won’t make any meanings except you have the protagonists agree to a common position.” Since oil prices began collapsing, oil companies have sacked hundreds of thousands of workers, and slashed investment budgets in a bid to accommodate prevailing realities.
As at Tuesday, Nigeria’s Bonny light was selling at $31.31, with production costs estimated at about $31 a barrel, meaning the country is only making about 31 cents on every barrel of oil sold.