Nigeria pegs 2022 base oil price at $57 per barrel

Nigeria's National Petroleum Corporation (NNPC) has recently set the base price of crude oil at $57 per barrel for 2022 and $61 for 2023. With Brent crude oil prices hovering around $70 per barrel, the country is carefully navigating the complex landscape of oil pricing dynamics. Uchenna Minnis, the Managing Director of Howard Minnis Asset Management, shared insights on the subject in a recent interview with CNBC Africa. Minnis commended the NNPC's approach, describing it as both collaborative and pragmatic, given the current uncertainties in global markets. He pointed to factors such as the lingering impact of the COVID-19 pandemic and ongoing geopolitical tensions as reasons for cautious optimism. The recent OPEC+ meetings also reflected a conservative outlook on oil supply, underscoring the need for a balanced and informed strategy. One key indicator Minnis highlighted was the importance of achieving full vaccination coverage and reducing infection rates, which would instill confidence in economic recovery and drive higher oil demand. This, in turn, could fuel a bullish momentum in oil prices. Turning the focus to Nigeria's domestic oil sector, Minnis discussed the implications of lawmakers' efforts to restrict private refineries from importing crude. The conversation centered around the Dangote Refinery project, a significant endeavor expected to revolutionize the country's downstream sector. Minnis underscored the need to clarify the nature of the refinery—whether it is privately owned, publicly operated, or a mix of both—to determine the most effective approach. He emphasized the importance of aligning investor interests with national objectives, especially in the context of refining capacity and self-sufficiency. Additionally, Minnis addressed concerns raised by the NNPC regarding petroleum smuggling, pointing out the price differentials that drive such illicit activities. He suggested that removing fuel subsidies could help mitigate smuggling incentives but highlighted the complexity of pricing mechanisms and market dynamics. The conversation also touched on the potential impact of local crude sourcing on commodity prices. Minnis explained that the move towards domestic crude supply aims to reduce import costs and enhance economic efficiency. By leveraging local resources, Nigeria could mitigate foreign exchange obligations and strengthen its energy security. However, he cautioned that careful consideration of investor involvement and strategic planning is crucial for ensuring long-term sustainability and economic benefits. Overall, Minnis's assessment highlighted the intricate interplay between global market conditions, national policies, and industry dynamics in shaping Nigeria's oil pricing landscape. As the country navigates these challenges, a collaborative and data-driven approach will be essential to optimize resource utilization and capitalize on emerging opportunities.