Windfall
An Energy Expert, Dr Billy Gillis-Harry has urged the Federal Government to invest any windfall from rising crude oil prices into the refineries and strategic sectors of the economy to ensure long-term national benefits.
Gillis-Harry, who is also the National President, Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) made this known on Sunday in Abuja in an interview with the News Agency of Nigeria (NAN).
NAN reports that Nigerians have expressed concern on the implications of the U.S./Israel-Iran war on crude oil price at the global oil market and the expected boom for Nigeria, following the 2026 budget benchmark of 64.9 dollars per barrel.
“Nigeria stands to benefit from a significant fiscal windfall as oil prices rise well above the 2026 budget benchmark of 64.9 dollars per barrel,” he said.
Gills-Harry further said that the budget also assumed production of 1.84 million barrels per day and an exchange rate of N1,400 per dollar.
This, he said meant Nigeria could benefit significantly from the current surge in global crude oil prices triggered by escalating tensions in the Middle East crisis.
Gillis-Harry recalled that a similar situation occurred during the Gulf War in the 90s when the country reportedly earned over 12 billion dollars in oil windfall.
According to him, with Nigeria’s 2026 budget benchmark pegged at 64.9 dollars per barrel, the current international crude oil price hovering between 92 dollars and 100 dollars presents a major revenue opportunity for the country.
He, however, cautioned that such windfalls must be properly managed to avoid repeating past mistakes associated with poor utilisation of excess oil earnings.
“The government should channel the additional revenue into productive investments that can generate long-term value for the country.
“We have a sovereign wealth fund that should be strengthened, our refineries that have remained largely comatose need to be revived, and the gas revolution being promoted by the government should also receive stronger funding,” he said.
Gillis-Harry said that while saving excess revenue was important, investing the funds in viable economic ventures capable of generating additional income for the country would be more beneficial.
Speaking on the implications of the U.S.-Israel tensions with Iran on global oil prices, he said geopolitical conflicts in major oil producing regions often disrupt global energy supply chains and push crude oil prices higher.
He explained that although Nigeria is an oil-producing country, it still felt the impact of international price fluctuations because crude oil was traded and priced globally.
“Domestic refineries must purchase crude oil at international market prices.
“Crude oil is priced internationally and anybody that wants to buy crude oil in Nigeria will buy it at the international price.
“That is why you see fluctuations even in local refining operations,” he said.
Gillis-Harry cited the operations of the Dangote Refinery, explaining that the refinery purchased crude oil based on the international dollar price, even when payment was made in naira equivalent at the prevailing exchange rate.
“Nigeria cannot simply allocate all its crude oil production to domestic refineries because a large portion of the production is tied to joint venture agreements with international oil companies such as Shell plc. and Chevron Corporation.
“These companies invest in the exploration and production process, so crude oil ownership and allocation are shared under existing partnership arrangements.
“So, the government should focus on expanding Nigeria’s crude oil production capacity to about four million barrels per day to meet both domestic refining needs and international obligations.
“Increasing production and encouraging investment in refining would enable Nigeria to become a major hub for petroleum product refining and export,” he added.
According to him, exporting refined petroleum products would generate more economic value for the country than exporting only crude oil.
Gillis-Harry also dismissed calls for subsidising crude oil supply to refiners, saying that the government does not have full control of crude production because of the joint venture structure of Nigeria’s oil industry.
He emphasised the need for authorities to strengthen oversight functions and ensure that the country’s oil assets were properly managed to maximise national revenue. (NAN)(www.nannews.ng)
Edited by Emmanuel Afonne
