May 01, (THEWILL) – Indications that the European Union (EU) may turn to Nigeria and other oil-producing countries for oil supply amid moves to approve an embargo on Russian oil, is generating mixed reactions.
The New York Times reported Friday, that the oil embargo would be phased in over a period of some months as the region finds alternative sources for the commodity over which it had largely depended on Russia.
Quoting EU officials, who spoke on condition of anonymity, the newspaper said the new resolution is expected to be approved by EU ambassadors this week as part of plans to avoid delays in the implementation of a comprehensive boycott of Russian oil.
Russia accounts for about one quarter of Europe’s yearly oil needs, but officials said the Union is looking elsewhere for supply.
“As the oil embargo is phased in, officials said the bloc would seek to make up the shortfall by increasing imports from other sources, like Persian Gulf countries, Nigeria, Kazakhstan and Azerbaijan”, the New York Times reported Friday, quoting officials.
The EU embargo — if enacted — will be the biggest and most important new step in the region’s sixth package of sanctions against Russia.
The new sanctions will also be directed at Russia’s biggest bank, Sberbank, according to officials who spoke to the New York Times.
However, industry experts have expressed mixed feelings over the proposed “windfall” for Nigeria arising from the planned Russian oil embargo by the EU as Nigeria’s oil production level has faltered in recent times over massive oil theft and other production challenges.
“Ordinarily, this will amount to another windfall for Nigeria, because the demand from the EU consumers is massive and steady, but Nigeria’s oil industry is at a significantly low ebb at the moment as over eighty percent of crude oil produced in the Niger Delta area is said to be stolen”, said Engr Mike Nwokolo, an oil and gas expert.
“You heard the lamentation of Mr Tony Elumelu recently, the chairman of Heirs Group, that the majority of oil produced in the Niger Delta Region was stolen, while bunkering and illegal shipment thrive.
“I do not see any good news here for Nigeria”, Nwokolo added.
Another oil and gas expert, Stella Akinsoye, said the deal, if it sails through, will be a huge plus for Nigeria, notwithstanding the oil theft and other production challenges.
“If the prospect sails through, I believe the government will reinforce security of the oil-producing region because the revenue that comes from that deal will be massive and it is not something to toy with”, she said in a chat with THEWILL Saturday.
Nigeria has faced challenges with oil production in recent months as the nation had to close a number of its oil wells to keep criminals at bay, the Minister of Finance, Budgeting and National Planning, Mrs Zainab Ahmed, said in a recent interview with Bloomberg TV.
Mrs Ahmed said that upon opening the wells, Nigeria will meet its quota of producing 1.6 million barrels of crude per day (mbpd) as against the 20 percent shortfall in the country’s production level due to oil bunkering and other criminal activities.
Amid oil price rally as a result of Russia’s invasion of Ukraine, Nigeria has struggled to meet its Organisation of Petroleum Exporting Countries (OPEC) quota of 1.73 mbpd.
The OPEC monthly oil market report (MOMR) for April 2022 showed that the country’s oil production fell by 20,000 barrels per day (tb/d) in March to 1.24 million bpd from 1.26 million in February 2022.
The report further revealed that the nation also recorded a 24,000 b/d decrease in oil output to 1.35 million bpd in March, down from 1.38 million bpd the previous month.
As the EU plans to turn to Nigeria and others for supply, expectations are high that production would improve across the nation’s oil wells, but strong pessimism also persists in view of the ongoing oil theft and other hitches in oil production. “This is the quagmire Nigeria is currently confronted with”, Nwokolo said.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
