NIGERIA OIL PRICE HAS DROPPED AGAIN BELOW THE COUNTRY'S BUDGET BENCARK
For the third time in the past weeks crude oil has dropped below the country's 2015 budget. The first time was $78, down to $73 and now $65.
The price of oil which accounts for more than 75% of government revenue an 95% of foreign exchange income has fallen by 37% this year. It has been believed to fall to $50 a barrel in the coming months because the market forces shake out the weakest producers. Thus, there is great need to diversify the economy.
OPEC in its monthly report released on Wednesday cut the forecast for crude oil production in 2015 to the lowest in 12 years amid surging US shake supplies and reduced estimates for global consumption. Due to this reduction, OPEC reports said that," should the current fall in crude prices continue over a longer period, it will impact the non-OPEC supply forecast for 2015, especially anticipated growth in tight crude".
Reacting to this development, the director, centre for Petroleum Energy Economics and Law, Prof Adeola Adenikinju said that there is need for the country to reset the economy.
" however, the lesson now is for us to find ways to diversify our revenue base. This has been the official mantra for a long time, but with the current reality in the global oil market we must start to walk the talk. The non oil sector that has dominated the structure of the GDP should now also contribute similar proportion to revenue base of the country. It is time to locally transform our crude oil and natural gas by adding values to create products like LPG, fertilizers, electricity, petrochemical products, plastic products, among others. This will create a lot of jobs for the economy and boost the integration of oil and gas sector with the rest of the economy". He said.