Nigeria hopeful crude oil price will rise to its true value soon

Vienna, Austria, 23 September 2016--The Nigerian Federal Government of President Muhammadu Buhari is “very hopeful” that the price of crude oil will soon get back to levels that justify the true value of the commodity, according to the country’s Minister of Science and Technology, Dr. Ogbonnaya Onu.

“We do believe that the price should be higher than what it is today. A more fair and reasonable price would be good for both the seller and buyer of the commodity,” he said in an interview at the OPEC Secretariat on September 15, shortly after paying a courtesy call on the Organization’s Secretary General and countryman, Mohammad Sanusi Barkindo.

The Minister also maintained that the crude price should be high enough to cover the often high cost of production.

Uncertainty surrounding the future direction of oil prices has led to Nigeria adopting a conservative budget for 2017 set around a crude export price of $42.5 a barrel and a production target of 2.2 million barrels/day, the same output level set for 2016. However, security issues and technical problems have prevented this output level from being reached.

Asked about this situation, Dr. Onu pointed out that Nigeria is fortunate to have during this challenging period a President in the person of Muhammadu Buhari whose commitment to secure his country to the best of his ability is acknowledged globally.

Regarding militancy in the Niger Delta area, where most of the country’s oil and natural gas is produced, he said the President and Federal Government were working very hard to ensure that the region is stabilized.

“We are very hopeful that before long the security situation will improve so that our full OPEC oil production level will be realized,” he affirmed.

Concerning OPEC, he pointed out that the Organization still has a very important role to play within the global community.

“We in Nigeria are very confident that the new Secretary General, HE Mohammad Sanusi Barkindo, will take the Organization to a level where most people want it to be and to ensure it continues to play its important role within the world economy,” he stated.

HE Barkindo began his three-year term at the OPEC Secretariat on August 1 after being unanimously appointed to the position by the 169th Meeting of the OPEC Ministerial Conference held in the Austrian capital in June.

Dr. Onu maintained that it is important that those who produce commodities get appraise from them.

“It is good for the world because we have seen what the near collapse of commodity prices have done to many countries, as well as the global economy. We want a world that is peaceful and prosperous. I think that OPEC has a very important role to play in this direction,” he asserted.

Asked how important producer-producer and producer-consumer cooperation is to the oil industry going forward, the Minister said it is very important because if the relationship is not good it will adversely affect the global economy.

“So a very good relationship between the producers and the consumers is very desirable. And I think that as far as OPEC is concerned, it needs a capable Secretary General to make sure that this good relationship happens. We believe that HE Mohammad Sanusi Barkindo can fulfill this role.”

Referring to the upcoming 15th Ministerial Meeting of the International Energy Forum (IEF), to be held in Algiers, Algeria on 26-28 September, Dr. Onu said this is a very important gathering for the producers and consumers, adding that he expects that this and subsequent meetings will not only do a lot for OPEC, but also for the world in general.

“Crude oil still remains a very important commodity. The transportation system the world over relies on it and even for manufacturing, the petroleum industry is key - in fact for many industries. Once we have oil market stability it will help many countries that have problems now to recover.”

The Minister said he felt the world today should be looking at essentially being one family.

“We can see the problems immigration is causing in different parts of the world and if we make sure that no part of the world is left behind it is going to help with global stability and the search for peace and prosperity,” he said.

Asked about the work of his Ministry in Nigeria, Dr. Onu professed that science and technology the world over is key in terms of diversifying economies.

He explained that since the country’s independence, the Nigerian economy has been resource-based.

Now, said Dr. Onu, Nigeria is working very hard to move the economy from resource-based to knowledge-based and innovation-driven so that the diversification of the economy will be sustainable and the country will remain competitive.

“If it is not sustainable and not competitive you can make progress, but then there will be regression. And you cannot carry out this diversification without science and technology - and that is the mandate for my Ministry.”

The Minister stressed that this new approach will pay dividends in the future and will really help the country prosper.

The Minister pointed out that Nigeria is a very big nation and has a very large market and a lot of resources, not just petroleum but well over 30 solid minerals.

“In fact, there is hardly any solid mineral of note that we do not have in commercial quantities. Once we can add value through science and technology we will be able to build enough wealth to help the search for peace.

“Nigeria can do a lot of good in the world but we need the resources with which to do so. And we believe that diversifying our economy will help us – and help the world search for peace and prosperity,” he concluded.

In their meeting, Dr. Onu and HE Barkindo discussed the oil market situation, especially the damaging effects of price volatility.

HE Barkindo spoke of the shock to economies like Nigeria from the fall in international oil prices, which was primarily caused by excess production at a time of stagnant economic growth.

He said producers are likely to come together in an informal setting on the sidelines of the IEF Meeting in Algiers to discuss the current situation. Everyone was hurting because of the current market conditions.

For his part, Dr. Onu congratulated HE Mohammad Sanusi Barkindo on his appointment, stating that the new OPEC Secretary General came with proven leadership qualities and the ability to unite parties for a common interest.

HE Dr. Onu (right) and HE Barkindo

HE Dr. Onu (right) and HE Barkindo