By Olanipekun Olayinka
Following the adverse effect of COVID-19 on Nigeria’s economy which has inturn led to the cut of national budget and oil price benchmark from $60 to $30 per barrel, the former President Nigerian Association of Petroleum Explorationists (NAPE), Mr Abiodun Adesanya said supply war between Saudi Arabia and Russia resulted in oil price downturn below $30 per barrel.
Reacting to the effect of COVID-19 on upstream sector, Adesanya said coronavirus has shut down countries that consume Nigeria’s crude oil which in turn led to the shutdown of their machineries that require the Product for the generation of energy.
Abiodun said, “ Besides, Organization of Petroleum Exporting Countries (OPEC) met at the the first quarter meeting and decided to reduce production quota.
“They then called Russia who is not a member of OPEC or who is supposed to be a friend of OPEC to get their support on it and that sparked the ego problem between Saudi Arabia and Russia that led to a price war which drove price down and we have lost 50per cent of the price, prior to that meeting.”
He added that the problem led to loss of revenue for the country and the inability to meet so many of the budgetary projections.
The former NAPE boss reiterated that “the federal government has adjusted the budget benchmark to $30 and my believe is that the impact of what coronavirus has done on the economy will be covered with this new benchmark especially as it’s gradually creeping in.
“Furthermore, you know the impact always follow the action and it will look like we are surviving, but the real impact would come at the end of April, when cargoes to be lifted are no longer lifted but all over the place looking for when we don’t have revenue”
He added that when Nigeria begins to sell on a cash and carry per joule basis it shows the effect adding that if vaccine is got for coronavirus there would be a slack period, before things will begin to gradually creep up.
Abiodun said when things begin to get better, they will cautiously be going up and wouldn’t go up suddenly.
Also speaking on the $30 per barrel benchmark reviewed by the national assembly, he said “I think what they are doing is that they are gauging their best that in about a month time, the curves would begin to turn on this coronavirus.This implies that the risk of the infection would begin to go down.Once it begins to go down, gradually people would be coming out of non-productive activities and begin to produce. By the time that happens (peradventure it happens before summer), before it is cleared out that would be by the end of September and October.By the time the overall momentum is regained towards the winter that would be December and January cargo.”