The Minister of State for Petroleum Resources, Timipre Sylva, has said the country needs an oil price of $70 per barrel and a production of two million barrels per day to sustain its budget.
Sylva said the production cuts by the Organisation of Petroleum Exporting Countries and its allies had helped to stabilise the oil market, adding that all members of the alliance shared the same commitment to balancing supply and demand.
“You can see very clearly that the market is already starting to show signs of rebalancing; it’s stabilising. We believe that maybe, towards the end of this year, we will see a rebalanced market,” he was quoted by Energy Intelligence on Wednesday as saying in an interview.
The OPEC+ production cuts have helped lift the price of the international oil benchmark, Brent crude, from a low of around $20 per barrel in April. It stood at $44.85 per barrel as of 6:40pm Nigeria time on Thursday.
But the recovery appears to have stalled in the mid-$40s, which remains well below the comfort zone of Nigeria and other producers.
Sylva said, “I must tell you that it is very difficult for the country at this time. We cannot possibly carry on with all our activities.
“The president approved a 25 per cent cut in our budget. That’s 25 per cent of everything that we plan to do for this year, out the window before we even started.”
Asked what level of oil prices would sustain the country’s budget, he said production volumes had to be taken into consideration as well as prices, because low production volumes could be just as harmful as low prices.
“I cannot tell you what price will be optimal for the country. It’s not just the price; it’s also the production. … For me, I would say if we produce two million bpd at $70, that would be optimal for Nigeria,” the minister said.
He said the country would make substantial “catch-up” cuts in its oil production in August and September to compensate for producing above its OPEC+ ceiling in May and June.