U.S. Plans to reduce importation of Nigerian crude.
The Federal Government on Tuesday assured Nigerians that the country’s economy is not in danger despite the discovery of shale oil by the United States.
The United States is one of the major buyers of Nigeria’s crude, with more than one-third of the Nigeria’s crude oil export to the international market consumed in the United States.
With the discovery of shale oil as alternative for crude oil, global industry analysts and experts believe a likely decision by the United States to cut its oil supplies from abroad, including Nigeria, would potentially impact negatively on the Nigerian economy.
However, the Senior Special Assistant to the President (Public Affairs), Doyin Okupe, told reporters on Tuesday in Abuja that contrary to such fears, Nigerians have no cause to worry, as the economy is in good hands, considering the degree of transparency and forthrightness the Federal Government has displayed in the management of the economy in the last two years; as well as the various fiscal policies, reforms and programmes adopted since it came to power.
“The truth is that (with) Nigeria’s total National crude oil production (at) 2.06 million barrels per day, Europe has become a major destination for Nigerian crude oil cargoes, with the volume of Nigerian crude oil grades going to Europe increasing from 28% in 2011 to about 38% in 2012,” he said.
Mr. Okupe linked the growing demand for Nigerian crude in Europe to the Free Trade Agreement between Europe and South Korea, pointing out that it is becoming more profitable under this agreement to sell North Sea crude oil grades to Korea.
“Many companies prefer to trade their cargoes in Korea thus creating shortfall in Europe. In addition, the North Sea as a whole is recording annual natural decline from matured field of about 10%,” he said, pointing out that in the same light, Asia’s demand for light sweet grade is rising, stepping, with India in particular consistently taking an average of 120,000 barrels per day from Nigeria.
He said the Federal Government is already adopting appropriate strategies to effectively mitigate the impact of decline in the U.S. markets, with the number and volume of term contracts with Asian refiners gradually being increased, assuring that in both the short and medium term, a combination of market openings in Europe and Asia would effectively compensate for the loss of the U.S. market.
Identifying the challenges faced by the present administration to include dependence on oil exports, high recurrent expenditure, high food importation, poor infrastructure, high inflation, falling reserve and rising domestic debt, Mr. Okupe said the Jonathan administration’s reforms have reduced dependence on oil, with the agricultural sector alone contributing over 40 per cent to the Gross Domestic Product in two years.
“The inviolable truth is that the Nigerian economy, like the economy of other Nations has its challenges which the Jonathan administration has courageously and innovatively been tackling with measurable, obvious and clearly tangible positive results in the last two years,” Mr. Okupe said.