Sylva Speaks On Economic Impact Of Oil Price Hike

Timipre Sylva, minister of state for petroleum resources, has disclosed that the rise in prices of global crude oil is not good for Nigeria’s economy.

Sylva disclosed this while speaking on the rising crude oil prices in an interview with Bloomberg Television, adding that Nigeria’s comfort zone in terms of oil prices was between $70 and $80 per barrel.

Prime Business Africa can recall that on Tuesday the global oil benchmark, Brent crude, rose over 5 percent to trade at $102.27 a barrel with escalating tensions between Russia and Ukraine.

The minister explained further that Nigeria was not gaining anything from the soaring prices.

According to him, “I’m hopeful the prices will move around, maybe $80, maybe $70. We are hoping it will come down to somewhere around $70 to $80, which will be sustainable for us to the end of the year.” 

Sylva added that the inability of Nigeria to activate the oil wells it shut down when OPEC instructed producing countries to cut production as well as the lack of investment in the upstream sector is affecting the country’s ability to increase production.

He said: “We are working hard on that (production increase). What happened to us was the fact that we had to cut back at the time, and, of course, in such a way you can’t cut back mathematically.”

“So, you want to cut back 100,000 barrels that you shut out, maybe we’ll shut down about 200,000 to 300,000 barrels. So, at the end of the day, we over-complied because we just couldn’t achieve it mathematically.

“In trying to cut down, we cut down too much. And now to come back, it’s not been easy for us to get the wells back to production.”

According to the minister, a lot of additional investments would be needed to ramp up production, but he lamented that foreign funding was drying fizzling out for the industry.

Answering questions on the supply of gas to Europe, Sylva said he was not aware of discussions with the United States for Nigeria to increase the supply of gas to Europe amid Russia and Ukraine tensions.

According to him, if it has to happen, it would take time and investment.

He said the country intended to begin supply to the continent through Algeria and Morocco in the near term.