Ibe Kachikwu, minister of state for petroleum resources, says Nigeria is unruffled by the slide in crude oil prices, maintaining that the country can comfortable ride the storm with oil prices hovering between $60 and $70 a barrel band.
The global crude oil market had been rattled recently on the back of mounting fears of another supply glut with the Brent crude, the international benchmark of crude oil, shedding $5 during the past eight days of trading.
But with Nigeria’s oil production on the ascendancy, the federal government believes the oil price band for now will not create another shock for the economy.
Kachikwu, at a world press conference on Thursday in Abuja, said rather than the oil prices, what the country and oil producing companies should be worried about is that of keeping production cost low.
“I don’t think we need to be panicky about it, we hit $70 per barrel in December which was a surprise to all of us. We are not ruffled by it. I know it has come down to highest $60s now,” the minister said.
“We were producing 2.07 million b/d at the end of January was at 2.07 million b/d, with crude oil alone averaging 1,707,294 million b/d. So we are not rattled at all by the decline in oil prices, but to focus on production costs.”
The 2018 budget is anchored on oil price assumption of $45 a barrel and production benchmark of 2.3 million b/d.
The Organisation of Petroleum Exporting Countries (OPEC) had reached an agreement with non-member countries in November to reduce crude supply to the market in the bid to boost prices.
Prices recovered from as low as $40 a barrel to a high of $71 a barrel at the end of January this year.
However, a surge in shale oil output by the US has threatened to overturn the gains of the historic accord between OPEC and non-OPEC countries.
Kachikwu, however, said it is not yet time for OPEC to press the panic button.
“The recent drop in oil prices was still insignificant to worry OPEC,” he said.
“But I have always said that OPEC needs to just focus on itself and what it needs to do, and forget what is happening in shale.
“Every OPEC producer must work hard to be a least cost producer because the truth is that if Shale can produce at $65, there is absolutely no reason why we should be struggling. So, upper $60s is not too bad, we moved from $27 and $28, let’s not begin to complain, it is a bit too early. These things fluctuate.”