“Kyari’s interview was conducted at a weekly programme tagged ‘Half-Time Talk’ organised by Gulf Intelligence, a United Arab Emirate-based communication and research firm.
Kyari also said though Nigeria did not fully comply with a pact by oil producers to rein in output to balance markets, it would make additional cuts to make up for the lapses by mid-July.,”
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The crash in oil prices a couple of months back due to heavy decline in demand for crude, which was a major fallout of the COVID-19 pandemic impact, led the NNPC into offering oil traders huge discounts on Nigerian crude oil grades.
Two of Nigeria’s banner grades, Qua Iboe and Bonny Light, were to sell at discounts of $3.92 and $3.95 respectively to dated Brent.
Responding to a question on whether the NNPC would continue offering discounts on crude oil as the price recovers, Kyari said: “Absolutely not, discount will go away, definitely within the shortest period of time. As you know, what we did in the last two months was to close that gap much shorter than what it was, and by the end of June or July we will see a situation where we can take out that discount because it’s no longer necessary.
On the significance of the decision of the Organisation of Petroleum Exporting Countries and its allies under the OPEC+ family to retain their earlier production cut agreement, Kyari said that was intended to bring about rebalancing in the market. He added that they have started seeing the sign of its workability.
“What this means is that this will give us the rebalancing of the market, we can see a rebound in prices with time so that we don’t have to produce oil and give out for free. And we have started seeing the sign that this works.
“We are pulling down the supply and getting a balance that will come to a situation where we can at least recover our costs and get some margin out of these businesses, which is a good thing to do,” he stated.
He explained that the OPEC+ effort was to bring stability to the market and to see the probability of oil price settling between $42 and $45 per barrel.
He said: “What we did to oil price was to bring some form of stability by the end of the year, probably we can see settling at $42 to $45 at the end of the year. And you can see the short term response as a result of the OPEC+ intervention and I don’t think that is completely sustainable save the production cuts are implemented in full by the end July.
“If that happens, we see sustenance of the current level of $42 to the Brent and potentially grow to a region of $42 to $45 by the end of the year. I don’t think we will see any sort of $30 oil in the near future if this situation is sustained.”