An estimated 84 million barrels of Nigerian crude oil is currently stranded at sea due to the COVID-19 pandemic; a report by Wall Street Journal has said.
In an April 27 report, the newspaper said cargo ships filled with Nigerian crude had nowhere to go due to the COVID-19 pandemic and Nigerian oil companies were competing to fill the “last few empty tankers still left at sea”.
The tankers are reported to be coming from production fields managed by Royal Dutch Shell and Exxon Mobil.
According to experts; it would be risky to shut down production in some oil fields as the wells are “too old to be restarted once they go idle”.
However, a situation where companies run out of vessels would make shutting the oil fields inevitable.
“When there are no more vessels to load the crude, then the entire world collapses,” Kola Karim, the chairman of Shoreline Natural Resources, was quoted to have said.
“You will have serious, serious security implications. Unrest.”
According to the Wall Street Journal, a tanker was turned back from the US Gulf Coast and it returned to the Canary Islands, where other Nigerian-hired ships are idled.
The COVID-19 pandemic has resulted in reduced demand for crude oil across the world and a price war between Saudi Arabia and Russia worsened an already bad situation.
In response to the fall in crude prices, Nigeria slashed its 2020 budget and reduced the budgeted crude benchmark.
The Organisation of Petroleum Exporting Countries (OPEC) and its allies (OPEC+) also agreed on a graduated supply cut that is scheduled to last till April 2022.
Nigeria currently has 1,918 active cases of the coronavirus in addition to 385 recoveries and 85 deaths.
Meanwhile, National Leader of the All Progressive Congress (APC), Bola Tinubu, on Sunday, May 3; urged the Central Bank of Nigeria (CBN); to reduce interest rates to avoid stifling domestic investment and income during the COVID-19 crisis.
Tinubu made the call in a statement in Lagos.
The APC leader said that the reduction would cushion the harsh effects of the COVID-19 crisis on the economy. Further, he advised the Federal Government to avail tax reliefs that would aid financial institutions to reduce interest rates.
He said that by driving down the interest rates; the government would be saving the nation from a monumental drag on economic growth.