The Nigerian National Petroleum Corporation (NNPC) has said it will end its crude sales discount regime next month.
Mele Kyari, the Group Managing Director, made the declaration in an interview with Bloomberg TV on Wednesday, saying the NNPC planned to achieve the ambition by 30th June or latest by July.
The interview was conducted at a weekly programme named “Half-Time Talk” put together by Gulf Intelligence, a United Arab Emirates-based communication and research firm.
Kyari said that it was still a good business for the NNPC and Nigeria if oil price settled at the present $42 or thereabout.
According to him, Nigeria did not fully adhere to an agreement by oil producers to cut output but would make up for it by mid-July by making additional cuts.
The global oil price slump that occurred few months ago on the back of substantial fall in fuel demand triggered by coronavirus lockdowns compelled the state-owned corporation to offer oil traders big discounts on Nigerian oil grades.
Qua Iboe and Bonny Light, two of Nigeria’s chief oil grades, were offered at discounts of $3.92 and $3.95 respectively to dated Brent.
“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,” Kyari said, reacting to a question on whether the NNPC would continue to give discounts on oil as price rebounds.
He stated that the determination of the Organisation of the Petroleum Exporting Countries and its allies led by Russia under the grouping, OPEC+ to extend the earlier output cut deal was intended to achieve a rebalance in the market.
“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,” he said.
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