The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, yesterday declared an end to fuel subsidy in the country, saying the corporation will no longer subsidise pump price of premium motor spirit, otherwise known as petrol.
According to him, market forces will henceforth determine the price of the commodity.
Kyari who spoke on an AIT morning programme, MoneylinewithNancy, in Abuja said, “There is no subsidy and it is zero forever, adding that going forward there would be no resort to either subsidy or under recovery of any nature. NNPC will play in the marketplace; it will just be another marketer in the space. But we will be there for the country to sustain security of supply at market price.”
Maintaining that NNPC was a transparent organisation, he pointed out that the Corporation was possibly the only company in the world that publishes its monthly financial and operations reports.
Kyari said the Corporation is proud of the initiative, just as he guaranteed Nigerians of NNPC’s commitment and observance of transparency and accountability in all its transactions.
He disclosed that as at yesterday, Nigeria produced 2.3million barrels of crude oil, including condensates, saying that the plan was for the country to ramp up production to 3million barrels per day in no distant future.
The NNPC boss observed that Nigeria was endowed with premium crude oil grades which are supplied to Europe, Asia and India, stressing that despite the COVID-19 pandemic which has affected demand and supply fundamentals, all of Nigeria’s export terminals are still in operations.
„The key issue in crude oil business is market fundamentals of demand/supply. I believe COVID-19 will subside and countries will come back to life. I don‘t see oil price going below the $20 we saw last week. I‘m certain, all things being equal, oil price will bounce back,“ Mallam Kyari informed.
The NNPC’s helmsman assured Nigerians of ample supply and distribution of petroleum products, saying despite the Coronavirus pandemic, the corporation had in stock about 2.6billion litres of petroleum products that could service the country’s energy needs for the next two months.
He stated that the NNPC was collaborating with all relevant stakeholders to ensure that the supply and distribution value chain is not disrupted to guarantee energy security for the country.
Speaking on contributions of the Oil and Gas Industry in curbing the Cronavirus pandemic in the country, Kyari expressed the sector‘s readiness to build a robust healthcare for Nigeria.
He said the industry is set to embark on the construction of at least two hospitals and a world class diagnostics center in each of the geopolitical zones in the country, in addition to the 250 temporary bed facilities that it offered to support government’s efforts in the fight against Coronavirus.
He noted that the hospitals and the world class diagnostics centers would be an addition to the regular corporate social responsibility (CSR) initiatives of the Upstream and Downstream companies, as well as service providers operating in the Oil and Gas Industry.
A press release by the group general manager, Group Public Affairs Division of the NNPC, Dr Kennie Obateru, quoted Kyari as saying that all commitments from the industry would be collected in kind and handed over to the presidential taskforce for the control of coronavirus.
He added that the petroleum industry would use its clear and transparent governance framework, collection and distribution processes already emplaced in respective companies to support the country’s healthcare infrastructure in this troubling times.
The GMD stated: “We and all our partners, comprising the Upstream, Downstream and service providers, decided to come together to respond in three thematic areas. First is the provision of medical consumables such as facemasks and testing kits among others.
“Secondly, the medical logistics and patients’ support issues such as ventilators and oxygen generating plants. The third leg is provision of temporary isolation centres and the establishment of permanent medical infrastructure that will be of use during this period and after the pandemic is stemmed. We believe this pandemic will be eradicated.”
He hinted that the oil and gas industry in the country would liaise with the various state governments to emplace a sustainable and efficient governance structure to manage the health facilities established by the industry long after the COVID-19 pandemic had been brought under control.
“Nigerians will recall that last week, NNPC and our partners in the Upstream, Downstream and services sector launched an Industry-wide collaborative initiative in support of the ongoing Federal Government’s efforts to curb the COVID-19 pandemic. The total commitment to this initiative now amounts to N21billion and it is growing and potentially it is going to grow,” Kyari noted.
The NNPC GMD stated that the distribution of the committed items would be under the stated three-thematic areas of the initiative, adding that considering supply chain constraints, all committed items cannot be delivered and distributed all at once.
According to him, NNPC and partners have a streamlined programme for the distribution of these items on weekly basis to the nook and cranny of the nation from the three clearing houses in Abuja, Lagos and Port Harcourt.
“This is the hallmark of ‘Good Corporate Citizenship’, which the Oil & Gas Industry is known for. We remain accountable to Nigerians and will continue to provide details of what has been collected, how it’s distributed and where it’s being delivered to, the helmsman of the Nigeria State Oil Firm enthused.
Crude Down By $3 As Supply Uncertainty Pervades Market
Meanwhile, crude prices yesterday fell 12 per cent when markets reopened for the week before paring some of those losses in volatile trading that reflected investors’ doubts.
Uncertainty had enveloped the crude market as to whether Saudi Arabia and Russia can reach a supply deal to repair some of the damage to the sector caused by their price war and the coronavirus pandemic.
Brent crude fell in early trading to just over $30, losing more than $3 a barrel but holding on to the bulk of the gains made last week when Donald Trump, the US president, sparked a rally after suggesting that Saudi Arabia and Russia would agree to remove 10m-15m barrels a day of oil supply.
Crude prices then recovered to change hands at around $33 a barrel by late afternoon in London yesterday after Dan Brouillette, the US energy secretary, said Saudi Arabia was trying to convene a G20 meeting on Friday to discuss new production cuts.
US benchmark West Texas Intermediate was trading at more than $26 a barrel, down almost 7 per cent for the session.
But producers remain far apart. OPEC’s meeting with Russia, initially scheduled for Monday, was postponed until Thursday as a war of words between Moscow and Riyadh deepened over the weekend, with both accusing each other of sparking the price war to hurt the US oil sector.
Brent prices still remain down by more than half since January.
The Kremlin on Monday stressed that any deal would require the participation of countries that had not previously taken part in any co-ordinated cuts with OPEC, in an obvious reference to the US.
“In order to stabilise the market, it will also require the participation of those countries that did not previously participate in co-ordination,” Dmitry Peskov, spokesman for Russia’s president, Vladimir Putin, said, adding that “indeed, those who are now in working contact are talking about this.”
But Mr Putin did not plan any discussions in the near future with Mr Trump or King Salman of Saudi Arabia, Mr Peskov said, and had delegated to his energy minister any consultations with Russian oil companies.
Saudi Arabia moved to flood the market last month after Russia refused to make further cuts to production, before the extent of the demand collapse from coronavirus lockdowns was fully known.
Trump’s comments over the weekend, saying that he preferred the “free market” to resolve the price collapse, but hinting that the US could impose tariffs on Saudi Arabian and Russian oil supplies, also weighed on prices as traders discounted rumours that Texan oil producers might formally join Opec cuts.
On Sunday, Trump said, “I would do tariffs, very substantial tariffs, because we’re independent and we want to have our own oil. And if I did the tariffs, it would make sense it would be saying we don’t want foreign oil.”
Brouillette confirmed to Fox News on Monday that the US was studying the possibility of applying tariffs to foreign oil imports and said President Trump had also asked him to find additional capacity to store more US oil.
FG Optimistic Of Favourable Economic Forecast Ahead OPEC Meeting
Meanwhile, the Minister of State for Petroleum Resources, Chief Timipre Sylva, yesterday said Nigeria will take positions that will favour its economic forecast at the upcoming OPEC+meeting.
Sylva who gave the assurance in a statement he issued in Abuja said, “As Minister of State for Petroleum, I will continue to monitor the impact of COVID-19 on our and the global, economy.
“In our consultations with global industry stakeholders in the lead up to the OPEC+ meeting scheduled for April 9, the Nigerian Government will take a position that is in the best interest of our short term and long term economic forecast”.
He assured Nigerians and the international community that the country was watching developments in the oil and gas industry with keen interest.
“Specifically, Nigeria is very mindful and appreciative of the role of Saudi Arabia and other members of the OPEC family,” he added.
Sylva noted that Nigeria had always collaborated with key OPEC members such as Saudi Arabia in maintaining a balanced position that had helped to make OPEC one of the most successful global institutions in recent history.
According to him, Nigeria intends to maintain this team spirit even as it takes into account the position of OPEC strategic allies such as Russia.
The minister continued: “As always, the driving force of our OPEC policy is first the stability of our national economy as well as the stability of the global economy which is heavily dependent on OPEC and its strategic partners, popularly referred to as OPEC+.
“Nigeria, like the rest of the world has been hit by the Global Pandemic COVID-19 and is prepared to join the rest of the world in making the necessary sacrifices needed to stabilize the crude oil market; and to prevent what is likely to be a major global economic meltdown”.
The virtual meeting, which was called by Saudi Arabia, comes after President Donald Trump suggested that massive production cuts could be on the way and Saudi Arabia called for an “urgent” effort to restore “balance” to the oil market.
Saudi Arabia on Thursday called for an emergency meeting of the OPEC and non-OPEC producers including Russia, saying it aimed to reach a fair agreement to stabilise oil markets that have crashed on the demand impact from the coronavirus pandemic.
Prices have also been crushed after Saudi Arabia and Russia failed to agree on output curbs in March.