The Chief Executive Officer of Nigeria National Petroleum Corporation, Mele Kyari, says the surge in global gas prices could push up crude oil prices by $10 per barrel shortly.
Mr Kyari made the statement while speaking with Bloomberg Television presenter Manus Cranny on Wednesday.
According to him, the current gas prices will force energy consumers to shift from gas to fuel products.
“It will absolutely hit crude prices as energy consumers are forced to shift from gas to other fuels,” Mr Kyari said. “You wouldn’t be very wrong if you said you would see an additional $10 on a barrel.”
Gas supply have dropped in Asia and Europe, the shortage in demand has increased the prices of gas in some part of Europe.
In Nigeria, the price of cooking gas is high due to the low supply of gas, while oil and gas marketers attributes the increase in prices to high dollar rates and 7.5 percent value-added-tax
Speaking further, Mr Kyari said there is a potential global crisis in the gas sector because of low investment into gas projects in 2020.
“The implication of that is that we’re going to see the effect coming up in a year or two maximum. And that will also affect the gas supply all over the globe and, particularly, in Europe.
“That’s going to show up in a number of gas-rich countries and gas supply projects are being stalled, a number of midstream gas projects are being stalled or delayed, and the net effect will be that there will be an impact on pricing coming very shortly.”
Mr Kyari said Nigeria is faced with problems of gas supply because there will be slippages at the cargos point.
He added that NNPC is making an effort to improve gas plants and return to pre-COVID-19 arrangement for the gas industry to recover from lost investment during the pandemic.
“There are a number of things going on now to improve on the gas supply. We surely have issues around gas supply to the LNG plant, in particular, and even into the domestic market and the net effect is that you will see some slippages in cargos in 2022 and even in 2021,” he said.
“And the implication of that is that you have to do something pretty quickly and we have lost time, we have lost investment and for us, what must happen is a very quick return to a pre-COVID-19 level investment and that, of course, is being adjusted and I know that this is a key challenge for the industry.”
The Nigerian senate approved $57 per barrel as the oil benchmark for 2022 budget.
Nigeria is the sixth-biggest LNG exporter but 60 per cent of domestic gas used in the country is being imported from the international market into the country, according to Bloomberg.
