As myriads of challenges facing the Organisation of Petroleum Exporting Countries http://www.opec.org grow, analysts have advised the Federal Government to take decisive steps towards ensuring that revenue base of the nation is not threaten.
This country needs strategic economic reforms, analysts agreed. They said value chain in the crude oil that is key source of revenues are not optimised.
They stressed the government revenues collection is not optimised, and focusing on taxes from already pressured taxable individuals and companies not the best.
At the MarketForces Africa weekend roundtable, analysts stated that the recent signage of Petroleum Sharing Contract is a plus for Nigeria, albeit not without certain issues.
“We need to throw our net wide open to catch enough revenue generating ideas from all sectors, especially science and technologies”, analysts said.
In their economic review, participants said OPEC and its allies face stiffening competition in 2020, just as the International Energy Agency said on Friday, adding urgency to the oil producer group’s policy meeting next month.
“We need to look at other areas where the nation can generate income. It should not be about crude alone. Meanwhile, we have to avoid waste and allow market to find balance between demand and supply of certain resources, products”, Economic and Strategy expert, Olu Anisere from LSintelligence said.
In a report by International Energy Agency, it stated that the OPEC countries face a major challenge in 2020 as demand for their crude is expected to fall sharply.
The IEA estimated non-OPEC supply growth would surge to 2.3 million barrels per day (bpd) next year compared to 1.8 million bpd in 2019, citing production from the United States, Brazil, Norway and Guyana.
“The hefty supply cushion that is likely to build up during the first half of next year will offer cold comfort to OPEC ministers gathering in Vienna at the start of next month,” it added.
The report stated that while U.S. supply rose by 145,000 bpd in October, a slowdown in activity that started earlier this year looks set to continue as companies prioritise capital discipline.
Demand for crude oil from OPEC in 2020 will be 28.9 million bpd, the IEA forecast, 1 million bpd below the exporter club’s current production.
The recovery by OPEC’s de facto leader Saudi Arabia from attacks on the country’s oil infrastructure contributed 1.4 million bpd to the global oil supply increase in October of 1.5 million bpd.
“With plans underway for the Aramco IPO and the persistent need for revenues to fund the government budget, Riyadh has every incentive to keep oil prices supported,” the IEA said.
Saudi state oil company Aramco, the world’s most profitable firm, starts a share sale on Nov. 17 in an initial public offering (IPO) that may raise between $20 billion and $40 billion.
It was the IEA’s last monthly report before the Dec. 5-6 talks among OPEC states and partners led by Russia on whether to maintain supply curbs aimed at buoying prices and balancing the market.
The agency kept its assessments for growth in global oil demand in 2019 and 2020 at 1 million bpd and 1.2 million bpd respectively, but said its outlook might slightly underestimate the impact of tariffs from the U.S.-China trade war.
The IEA said that if some or all tariffs were lifted in coming months, “world economic growth and oil demand growth would both rise significantly”, though the rebound may not be immediate.
Sluggish refinery activity in the first three quarters has caused crude oil demand to fall in 2019 for the first time since 2009, the IEA said, but refining is set to rebound sharply in the fourth quarter and in 2020.