Nigerian crude producers are having a rough time due to the sliding crude oil prices, as they have started counting their losses.
These oil companies produce a fifth of the total crude supply by the Africa’s largest oil producer. They produce around 400,000 barrels per day out of the 2 million barrels per day that Nigeria produces.
“The impact is a complete and utter disaster,” Kola Karim, CEO (Chief Executive Officer) Nigeria’s third-largest independent oil firm, Shoreline Group, told Bloomberg in an interview.
The local oil firms are fighting hard to survive as Brent Crude remains on the $20 range, which means Nigeria’s crude is being sold at a loss, coupled with the fact that oil demand has plummeted to the lowest level in more than a generation.
In addition, Bloomberg stated that these local firms require crude oil prices to remain at $35 to $40 per barrel to cover operating costs compared to about $22 a barrel crude oil price the oil muti-nationals, like Shell, Exxon Mobil need to cover its operating cost.
Top leaders at many local oil firms in Nigeria revealed to Bloomberg recently that some local oil companies are drowning in debt at the present price of crude oil, while others have suspended oil production.
Meanwhile, yesterday in a note to CNBC, American elite bank Goldman Sachs, said,
“In oil, we expect the market to test global storage capacity in the next 3-4 weeks (WTI was a local event), which will likely create substantial volatility with more spikes to the downside until supply finally equals demand, as with nowhere to store the oil, supply has no other option but to be shut down in-line with the expected demand losses”.