1. Nigeria has only one major export called crude oil
2. Nigeria belong to an association of crude oil producers called OPEC. In this association, Saudi Arabia is the boss. They dictate members’ behavior like how much crude to produce and the price.
3. Saudi has the second largest oil reserves of 266billion barrels behind Venezuela’s 300billion. Nigeria is number 11 with 37billion. United States has 50billion.
4. Saudi Arabia produces 10million barrels per day and has a population of 33million. Nigeria produces about 2 million barrels per day with a population approaching 200million.
5. It costs Saudi $9 to produce a barrel of crude. It costs Nigeria $23.
6. Saudi Forex reserve is $500billion it can finance 40 months of imports. Nigeria Forex reserve is $36billion and can finance 3months of imports max.
7. Saudi has $320billion in Sovereign Wealth Fund, Nigeria technically has $2,2billion.
8. Before Corona Virus added to oil price woes. Saudi threw Nigeria and smaller producing OPEC members under the bus because Russia refuses to cut production to prop price up. Saudi flooded the market and offered discount to buyers. Russia refused production costs because it thinks; cuts empower Shale producers in America.
9. Nigeria have about 50cargoes of oil floating on international waters without buyers. A cargo contains about 2 million barrels of oil. Cost of shipping went up last week. They must find a way to sell these cargoes. No where to store them. It is not like biscuits.
10. Add all these up and include corruption, borrowing, lack of infrastructure and overpaid National Assembly to get a sense of what is coming.
Nigeria must think!