(4 minutes read)
· The Ministry of Power of Nigeria said that rumor making the
round that the government has announced free electricity for two
months was not true
· The Nigerian government said that it would cut its oil
production by 1.9 million barrels per day, reducing its daily crude
oil production to 1.412 million barrels
The Ministry of Power of Nigeria said that the rumor making the
round that the government has announced free electricity for two
months was not true. It said that any such decision would be
officially communicated as when such decisions are taken.
In the meantime, the Nigerian government said that it would cut its
oil production by 1.9 million barrels per day, reducing its daily
crude oil production to 1.412 million barrels. This is a follow up of
the historic decision reached by OPEC plus countries to cut back the
production to shore up the oil price, which is threatening to go
below US$ 20 per barrel on account of the impact of Covid-19
It is the expectation of the oil producing countries that the oil
price may bounce back by US$ 15 per barrel by way of cutting back the
production. Abuja is hoping that it could bring at least US$ 2.8
billion as additional revenue to the country.
The oil producing countries agreed on a reduction in May and June of
the world production up to 10 million barrels per day since the
continuous fall is adversely affecting the revenue flows of oil
producing countries. The oil prices have fallen to historic low
prices. That had forced many countries to store the oil without
pushing them to the market. Oil prices have dropped on account of lack
of demand due to Covid-19. The demand from two oil gushing
countries-China and India-have fallen drastically on account of the
lock down. Though China claims that its production will be back on
rail soon, there are not many takers to it. New Delhi is still in the
grip of a nation-wide lockdown. The reports coming from India indicate
that the shutdown will be rolled over for an unspecified period of
time. The aim of cut in production is to help the price of black
gold to rise, which has fallen victim to the covid-19 pandemic. This
fall is suffocating the economies of African producers.
With the production cutback, Nigeria is looking at a production
target of 2 million barrels per day. It is expecting that the oil
price will go up in the vicinity of US$ 57 per barrel in the medium
term.
