Beyond oil (Future without oil)
“Tribune” newspaper, June 17, 2025. Front page Headline: ISRAELI-IRAN WAR: NIGERIA MAY WITNESS PETROLEUM PRICE SURGE – CPPE warns” (from Akin Adewakun, Lagos).
“The Centre for the Promotion of Private Enterprise (CPPE) has warned that if not quickly addressed, the ongoing Israeli-Iran war may lead to a surge in the price of petroleum, diesel, jet fuel, gas and related products in Nigeria.
The Centre, in a statement issued by its Chief Executive Officer, Dr Muda Yusuf, stated that the development would also have far-reaching implications for a floundering global economy.
It argued that since energy cost remains a major factor in the Nigerian inflation equation, the war, it stated, may impact production cost, logistics cost, transportation costs, and the cost of power generation.
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“This presents an inflationary scenario. These additional costs would be passed on to final consumers, depending on the degree of consumer resistance.
There is also a global inflation dimension. Energy prices have global inflationary implications. Therefore, there is also an expectation of imported inflation in the unfolding geopolitical scenario,” the Centre argued.
CPPE noted that since high inflation drives interest rates, as monetary authorities respond to the inflation outcomes of current geopolitical headwinds, a tighter monetary policy regime is expected in Nigeria and other monetary jurisdictions.
It warned that economies around the world may experience renewed pressure on interest rates, with higher global interest rates likely to impact portfolio flows and their implications for foreign reserves.
“High energy costs, elevated inflationary pressures and a spike in interest rates are all headwinds that could undermine the profitability of businesses in the economy. Investors in the non-oil sector are likely to be more vulnerable in the present situation.
Nigerian firms with strong business links in the Middle East and those with strong supply chain linkages in the region would be vulnerable at this time because of the current instability in the region,” the Centre added.
CPPE, however, believed the nation’s economy could also profit from the crisis, since the surge in crude oil price would impact on foreign exchange earnings, with its trickle-down positive effects on the nation’s economy, since oil remains the biggest forex earner for the country.
“It warned that economies around the world may experience renewed pressure on interest rates, with higher global interest rates likely to impact portfolio flows and their implications for foreign reserves.”
“Crude oil price has surged to $75 per barrel, which is about 15 percent higher than before the outbreak of the Israeli–Iran conflict. This development would also positively impact the country’s foreign reserves, ensure better forex liquidity and ultimately the stability of the naira exchange rate,” it argued.
“Tribune” newspaper of June 17, 2025. Front page headline: “WHY OIL COMPANIES ARE LEAVING NIGERIA – PENGASSAN URGES FG TO ACT SWIFTLY DESPITE COST REDUCTION INCENTIVES” (from Christian Appolos, Lagos)
“The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has raised the alarm that worsening insecurity in Nigeria’s oil-producing areas, especially in the waterways, is compelling multinational oil companies to divest from the country, despite newly introduced cost-saving incentives by the Federal Government.
Speaking at a press briefing in Abuja, PENGASSAN President Comrade Festus Osifo said that while the recently signed Upstream Petroleum Operations Cost Efficiency Incentives Order (2025) by President Bola Tinubu was commendable, it fails to address the root causes of the high cost of production, which he said is, most notably, insecurity.
“The reason, the chief reason, the majority of the oil and gas operators (the international oil and gas companies) started leaving Nigeria is principally because of insecurity,” Osifo declared. “The cost of securing facilities and the cost of securing infrastructure in the Nigerian oil and gas industry became prohibitive. That is why they found places like Mozambique, Guyana, Angola, and Congo much more attractive.”
The Executive Order, signed in May, introduces performance-based tax credits of up to 20 percent for upstream companies that meet defined industry benchmarks for cost efficiency. While PENGASSAN acknowledged the effort, Osifo insisted that without government-backed security, the real issue would remain unresolved.
“For one offshore installation, you have a minimum of three or four security vessels, manned by naval personnel, paid for by the company daily. That’s not the case in countries like Ghana, where the government provides this protection.”
Read also: Beyond oil (Future without oil) Part II
He urged the government to take full responsibility for safeguarding oil installations, emphasising that oil companies should not bear such heavy security costs, which he described as “running into hundreds of millions of dollars per annum.”
Beyond insecurity, PENGASSAN also raised concerns over fuel pricing transparency. According to Osifo, despite significant reductions in global crude oil prices from $80 to around $60 per barrel, Nigerians did not enjoy a proportionate drop in petrol pump prices.
“When crude was at $60 per barrel, we should have been buying petrol at N700 to N750 per litre, not N900. Nigerians were exploited during that period,” he said, calling on the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to “do everything possible to ensure Nigerians are not exploited.”
PENGASSAN further recommended that the Federal Government adopt the NLNG partnership model for the country’s ailing refineries, particularly the Port Harcourt refinery, which was recently shut for maintenance. The model would see the government hold minority stakes while allowing experienced private investors—particularly international oil firms—to take majority control.
“This model has worked for NLNG. So, why can’t we replicate the same structure in the management of our refineries to eliminate political interference and promote efficiency?” Osifo queried.
