Except extreme measures are taken by the Federal Government in the light of the dwindling crude oil prices and the looming global economic downturn, the Nigerian economy would be faced with disastrous fiscal consequences, while oil producers might be forced to suspend production activities.
These were the views of experts in the petroleum industry who spoke on the issue in Abuja. In separate interviews, the experts were unanimous in their views that the impact of the dwindling crude oil prices on the Nigerian economy would be far-reaching and in worst-case-scenarios, could lead to shutting down of oil wells in Nigeria.
In his own submission, Engr. Chinedu Onyeizu, an oil industry expert and former senatorial aspirant of the All Progressives Congress, disclosed that the future looks terribly bleak for Nigeria.
He said, “When I say the impact could be devastating, I am thinking about the worst-case scenario – exchange rates will go south because the Central Bank of Nigeria (CBN) will not have funds to support devaluation; oil wells will start shutting down because of lack of storage capacity, and oil-related jobs will start going – higher unemployment rates in every related sector: banks, oil service companies, among others.
“However, if we assume COVID lockdown in many countries is relaxed and the factories start consuming petroleum by-products again, the good side of the news is that we can turn the economy around for exponent growth with this golden opportunity.
“If you recall, about three years ago, I had made a strategic recommendation to the federal government to immediately unbundle the NNPC and give the private sector an operating stake. In my recommendations, the government should focus on its oversight function. If we did that, we would have privately managed functioning modular refineries all over Niger Delta. We would have had petrochemical companies, plastic and fertilizer companies churning out plastic products and fertilizers from by-products of our crude oil.
“The business sense was transforming us to a multi-product economy from the abundant mono-product; crude oil. With negative or low crude oil price, your feedstock is almost free but you will be adding value to crude by enabling production of by-products in the country. Employment opportunities will be created, more foreign exchange earnings for the country, Nigeria will start exporting petroleum by-products in large quantities and the economy will even rebound stronger.
“The country needs to gather his best brains and forget tribal sentiments at this period in time. From my intervention, you can imagine where we would have been if I was invited to discuss details of my three- node model that was developed in Massachusetts Institute of Technology (MIT).”
Also speaking, Joe Nwakwue, Chairman, Society of Petroleum Engineers (SPE), said: “It is really terrible but this day was foretold. Oil prices have had a cyclical trend over the past 100 years, so no surprises. The COVID-19 epidemic however compounded it
“The impact is fiscally disastrous for our country. I am not sure we will be able to meet our obligations if this trend is sustained for months. The earlier we rein in the virus and restore global oil demand, the better for Nigeria.
“Measures can be categorised into short term, near term and long term. Short term is to try to rein in government spend, especially recurrent expenditure and seek opportunities to renegotiate or secure debt service reliefs.
“Medium and long term measures should focus on moving away from crude oil export to midstream processing and value addition, using the oil-industrial complex to pre-industrialize Nigeria.”