More investment in local refining capacity is the best way out of current economic conundrum which will ensure that the remains resilient post COVID 19 and beyond, Momoh Oyarekhua, OPAC Refinery chairman country, has said.
This according to him, making more investment has become necessary following the sudden but sustained drop in the price of crude oil in the international market resulting from the collapse in demand due mainly to the coronavirus pandemic, coupled with lack of storage capacity to take up excess supply on the part of most of the major buyers around the world has made them not to be able to sell at profitable prices.
He said that by encouraging and increasing local refining, Nigeria saves itself the embarrassing situation of chasing crude buyers around the world, and can also eliminate the importation of premium motor spirit ( PMS) and other refined products thereby making it possible that the country cuts its foreign exchange exposure.
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“We can save a lot of foreign exchange which will be utilized to fund other important sectors of the economy, which will mean that, as a country, we will not be heavily exposed to the international crude or currency politics. More investment is needed to increase our local refining capacity and the government should provide specific ‘Target Framework’ to further support and encourage local investors in this sector so as to ensure that we produce enough for our local consumption and even for export to earn more foreign currencies while creating jobs,” Oyarekhua has said.
It would be recalled that, following the outbreak of the COVID- 19 pandemic, the world economy had gone into a downturn resulting from the shutdown of economic activities leading to reduced or near absent demand for crude oil. The resultant effect was the drastic fall in the price of crude to nearly USD10 in the international market. On the back of the crisis occasioned by the pandemic, was the collapse of dialogue between OPEC and Russia over the proposed oil production cut leading to a Russia-saudi Arabia oil price war in March.
Reacting to this development and the anticipated future crisis, Oyarekhua stated that government increasing and doubling support for local refineries will further reduce the hardship faced by some of the players in the downstream sector of the oil industry whilst ensuring that Nigeria can achieve better consumerfriendly pricing for PMS and other finished products which can be produced locally, he made the argument that, “as a nation, we must boost the capacity of our local refineries and scale the modular refineries to meet the challenges of the future and to also sustain the gains we have made in the oil and gas industry”.
