Operators have bemoaned the prolonged low crude oil prices in the global market, adding that it has stilled investment and development of the industry.
The Group Managing Director of the Nigerian National Petroleum Corporation, Dr. Ibe Kachikwu indicated that the price of Nigeria marker crude, the Bonny light fell more than 50 per cent from about $110 per barrel in June 2014. To below $50/bbl today.
In a message to the pre-conference of the Nigerian Association of Petroleum Explorationists, NAPE in Lagos, Kachikwu noted that in 2014 bonny light fetched more than $2 a barrel more than the global benchmark, Brent crude, according to OPEC data.
He disclosed that this year, that premium has plunged to 74 cents, on average-the lowest in a decade.
Some attribute the fall in the value of oil to an unforeseen strength of the US shale market and other alternatives, others blame the surging export from Saudi Arabia.
Kachikwu said that this decline showed no sign of reaching the bottom just yet in the volatile global market. He remarked that for four years, up to June 2014, oil prices had remained consistently above the $100/bbl mark.
Kachikwu maintained that Ali Bin Ibrahim A;l-Naimi viewed as the optimum price to balance the market between crude oil price producers and consumers.
He said while growth in global demand has been subdued in recent years, supply-mainly from non-OPEC producing countries-has increased leading to a surplus of oil in the market.
The GMD said in a recent analysis, Citibank estimated that supply was exceeding demand by 700,000 barrels per day. “This resulted in a build-up of oil inventories.
For example crude oil production in the United States has increased significantly in recent years; the country produced nine million bpd in 2014 compared with five million barrels in 2008
“This has been possible because of years of historically high and stable crude oil prices made shale oil projects mainly in North Dakota and Texas-economically viable.”, he added.