By Adedapo Adesanya
Former Nigerian Vice President, Mr Atiku Abubakar, has called on the federal government to build strategic oil reserves so as to protect the nation from oil price fluctuations.
Amid the coronavirus crisis, demand for oil has slumped, with oversupply leading to massive storage issues.
Globally, oil prices have been hit by the effects of the coronavirus and Nigeria crude grades are currently selling below their production cost and this is a major threat to oil companies.
Mr Atiku, in a statement signed on Tuesday, advised the Nigerian government to protect the nation’s economy and take similar measures to protect their economy.
“If we build such infrastructure, we will not have to sell our crude at a production loss. We will be in a position to stockpile the product in our reserve until such a time as prices improve.
“The global oil market continues to suffer from the vagaries of the coronavirus pandemic, as prices continue to crash due to the sudden, massive and unexpected drop in worldwide demand for crude oil.
“The features market for commodities is a turbulent one, due to unforeseen hazards that come and go. Today, it is COVID-19; tomorrow, it will be something else.
“It is time for Nigeria to protect her economy from being tossed to and fro by circumstances beyond our control. We must assert our sovereignty, by exerting more influence over the global trade in crude oil, and other features,” the opposition candidate in the 2019 presidential poll said.
Mr Atiku, a member of the Peoples Democratic Party (PDP), stated that other countries in North America and Europe have all taken this course, adding that if Nigeria could build a crude oil reserve with massive storage capacity that could hold at least a month’s worth of the nation’s quota of Organisation of Petrol Exporting Countries (OPEC), the country could mitigate the impact.
“I would also strongly recommend that we discuss with our partners in the Organisation of Petrol Exporting Countries, and obtain a concession, whereby we can defer our daily quota, such that when we undersell, due to a crash in the price of crude oil, we can oversell when the prices stabilize, subject to the condition that we balance out our quota.
“Nigeria’s oil industry remains more susceptible to outside influences, than to internal control. This measure can flip that, and make our oil industry more stable, even when there is global instability. This will translate to greater economic independence on our part,” he submitted.
Modupe Gbadeyanka