Russia-Ukraine war, wake up call for Nigeria to develop oil and gas sector – Adekunle Ayoola
Bankole Taiwo, Abeokuta
An expert in international trade and relations, Prince Adekunle Adebayo Ayoola has said that the raging war between Russia and Ukraine and the consequent disruption in the energy supply to other countries of the world should serve as a wake up call for Nigeria to develop its oil and gas sector and maximize the huge economic benefits inherent in the sector.
Prince Ayoola said that had Nigeria developed this critical sector of its economy, now that Russia which is responsible for the supply of about 70% of oil and gas to Europe is being hit with various economic sanctions including ban on its oil by the Americans, Nigeria should have been in a good stead to be major supplier of oil and gas to other countries of the world.
Ayoola, a Nigerian based in Poland with interest in International trade and relations made this disclosure while speaking on the ongoing Russia-Ukraine crisis as it affects global trade and development in Africa.
He said for the very first time since 2013, the provocative attack by Russia against the Ukrainian on February 24 with a lot of stiff sanctions hitting Russia has led to a lot of disruption in global trade and finance with the crude oil crossing $100 per barrel and rising for as much as $117
He explained that “the Russia-Ukraine war has varied implications for Nigeria. While the spike in oil price has a silver lining for the domestic economy due to the expected boost in oil revenue, rising subsidy payments remain a fundamental challenge.
“The import-dependent country will also be at risk of higher imported inflation, which could drive up domestic commodity prices and reverse the current decline in inflation. Nigeria’s headline inflation fell marginally to 15.6% in January 2022 from 15.63% in the previous month.
Ayoola disclosed further that “access to credit from the international debt market will be largely undermined as investors adopt a cautious approach due to prevailing economic uncertainties. The country is also at risk of increased debt service costs due to higher interest rates in advanced economies.
“There have also been significant macroeconomic outcomes, including the heightened fiscal deficit, growing debt levels, the spike in debt service payments and money supply growth which has vehemently led to depreciation of the local currency and more intense inflationary pressures.
More importantly, the cost of flour, the price of bread and other confectioneries may also take a hit and that might lead to conflict and it would have downside risks to the Nigerian economy.
He revealed further that “Russia is known to be the second-largest producer of oil globally, the conflict in the region would disrupt oil supplies, reduce output and trigger higher prices. Already, the oil price is above 100 dollars, and the impact on energy prices is already being felt around the world and Nigeria isn’t an exception.
“The deregulated components of petroleum products would witness sharp increases which include diesel, aviation fuel, and kerosene and gas would suffer the same fate. And the escalation of these costs, there would be serious inflationary implications across all sectors of the economy.
Ayoola said it is regrettable that Nigeria said to be the largest oil producer in Africa does not have an operational refinery and imports fuel and most recently, adulterated fuel into the country adding that it is expedient for Nigerian political administrators to start to look inwards and invest in its infrastructure.
He said “Nigeria needs to get more from our gas reserves. If the country cannot supply neighbouring countries, it should develop it as a source of domestic energy production to fight it’s epileptic power supply challenges. I hope Nigeria learns from the Russian-Ukrainian predicament and contests to be a global player in the oil and gas markets”.
