Managing Partner, Energy Consulting Practice, Kelvin Emmanuel has asserted that Nigeria currently lacks the strategic crude oil reserves and shipping capacity required to benefit from global energy disruptions triggered by the escalating Middle East conflict.

In an interview with ARISE NEWS on Sunday, Emmanuel, said Nigeria must urgently develop a structured crude oil reserve strategy and a national tanker fleet to protect the economy and take advantage of global oil market volatility.

“Nigeria does not have a strategic petroleum reserve stock for times like this conflict that is separate from the crude held at terminals. Nigeria does not have any crude oil stored for a rainy day.”

He explained the current geopolitical tensions in the Middle East, “The US has declared that it was going to go after Kharg Island. Kharg Island and the cluster of islands around it store about eight million barrels of Iranian crude, which is about 90 percent of their crude daily output.”

According to him, the United States has threatened to target Iran’s key crude export infrastructure. “It is from Kharg Island and the surrounding terminals that most of the vessels come to load crude from Iran and then go out to the market.”

Emmanuel noted that one of the islands stores saying. “Kharg Island and the cluster of islands around it store about eight million barrels of Iranian crude, which is about 90 percent of their crude daily output.”

At the same time, Emmanuel pointed out that Gulf producers are attempting to mitigate risk. “The Saudi government has activated what is called the petroleum pipeline which moves about five million barrels of crude from the Ghawar field to the Red Sea.”

According to him, the pipeline can transport up to five million barrels per day. “Out of the around 11.2 million barrels Saudi produces daily, it can take about five million barrels by pipeline so it doesn’t have to go through those maritime routes.”

However, Emmanuel said millions of barrels of crude produced by other Gulf states. “There is still about 14 to 15 million barrels of crude produced between Bahrain, Kuwait and Iraq that still has to move through shipping routes.”

However, Emmanuel said millions of barrels of crude produced by other Gulf states still depend on maritim. “One of the casualties from this crisis that we have in Iran in the Middle East is the fact that a Supermax vessel, a Panamax vessel or a VLCC that can take up to 30 million barrels is now leasing for about $500,000 per day. Ten weeks ago the price of leasing that same vessel was about $100,000 to $120,000.”

He argued that Nigeria could benefit from rising tanker charter prices if the country maintained its own national fleet. “In 1976, when OBJ was new to president, he ordered for Nigeria to acquire 19 vessels, I got a receipt of those vessels, in 1980, right? Nigeria had a tanker fleet of about 27 vessels, by 1995, those vessels were no more.”

He said rebuilding such a fleet would enable Nigeria to transport its own crude cargoes. “You need a national strength, tanker fleet, to take advantage of the fact that if you’re creating a strategic petroleum reserve, you can also develop a basket for crude trading, make it easy for the government to profit from and use that crude inventory as a basis to borrow money.”

He suggested that Nigeria could store crude in global trading hubs. “you have to ensure there’s enough domestic crude reserves to release during a period like this, also leaves out storage banks in other parts of the world, Singapore, in Rotterdam, in Netherlands, in Fujairah, in the Middle East.”

He explained that a strategic crude inventory would not only secure Nigeria’s energy supply during global disruptions but also serve as a financial instrument. “When you create a strategic petroleum reserve authority you have to invest in a portfolio of stocks that can sell domestically and internationally. Government can take advantage of it. Sell when price is high and buy when price is low.”

According to him, crude oil reserves can be used as collateral. “That crude oil inventory can also be a means to negotiate in the international community.”

Emmanuel noted that many industrialised nations maintain large emergency petroleum reserves coordinated through global energy institutions.”look at the G7, right? It has the International Energy Agency, G Petroleum Reserve stock, while several countries have 1.2 billion barrels in stock, and they’ve decided that they are going to release 400 million barrels into the market, Not only, it is that today, Nigeria does not have any crude oil stored for a rainy day.”

He pointed out that several countries collectively hold more than 1.2 billion barrels of crude in strategic stock. “Nigeria today does not have any crude oil stored for a rainy day and cannot release crude oil to stabilise supply during a crisis.”

He also addressed the impact of global oil price volatility on domestic fuel costs. “The price of petrol in the United States has gone up to $1.40 a litre from $0.92 three weeks ago. The price of petrol in the UK has gone up to $1.82 which is about a 40 percent increase from three weeks ago.”

Emmanual acknowledged that Nigerians are experiencing similar economic pressure as global energy prices rise. “I feel the pain of Nigerians. I sympathise with them but facts are the facts. This is the price of capitalism and the price of crude oil volatility.”

He also said the Nigerian government should use the crisis as an opportunity. “Let us not waste a good crisis. The Nigerian government needs to develop a strategic petroleum reserve authority that will not only manage the domestic strategic petroleum stock but also manage petroleum reserves stored globally.”

He warned that Nigeria’s approach to energy policy has historically been reactive rather than strategic. “The government needs to be proactive. Nigerian government is reactive. It needs a framework to manage crisis. Government does not do crisis planning or scenario planning for doomsday.”

On the possibility of increasing Nigeria’s oil production through new projects, Emmanuel said major deepwater developments would take years before producing significant volumes.”Shell says that, Senebco says that they are ahead of schedule, so we expect that by fourth quarter in 2027 or early 2028, Q1, we’re going to see Bonga North use its first oil, Even when it comes on stream, we’ll not do more than 120,000 to 150,000 barrels. Bonga Southwest might take another three years, so we’re looking at maybe 2029, 2030 for its actual first oil.”

Emmanuel also pointed to structural challenges in Nigeria’s power sector affecting gas supply to electricity generation companies. “The gas aggregators in Nigeria today are owed about N2.5 trillion by generating companies.” (AriseNews TV)

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