By Udeme Akpan

THE Chairman, International Energy Services, Dr. Diran Fawibe, has expressed fears that the European Union, EU, sanction of Russia will worsen the current state of instability in the global oil market.

Speaking at the Energy Perspective, a Vanguard Live programme, Wednesday, he said: “Russia is the third-largest producer of crude oil in the world after the United States and Saudi Arabia. The supply of crude oil from Russia goes across the world, particularly in Europe and Asia. A lot of European countries depend on Russian gas, like Germany, and Ukraine.

“There is an issue with the outflow of crude from Russia; it will have a reverberating effect across the world. Currently, the EU are debating over the embargo being placed on Russian Oil, resulting from the sanction that the United States, along with its allies are imposing on Russia, resulting from its war on Ukraine.

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“If this takes effect, there will be a change in the supply of oil around the world. Although, some countries are saying that the disruption in supply cannot take place till the end of the year. If this happens immediately, it would cause disruption in the economy of some of the importers of Russian oil. If we’re in the period of winter where gas is important for heating, and then the main supply of gas is cut off, there will be a lot of problems, same as diesel. This is what is causing disagreement amongst the EU countries.”

He also said: “This shows the importance of Russian oil in the world. The effect on pricing has not played out completely. For instance, a million barrels of oil per day, if the sanction takes full effect can cause a major disruption in the world and will spike the price of oil. If about 3 million barrels of crude is removed from the market, automatically price of other grades of crude will rise too.

“The economic sanction on Russia means that the EU will no longer patronize Russian crude. Although some countries are not totally agreeing with the sanction, Russia used to be a member of OPEC+ and they managed a good percentage of crude. There will be instability in the international market when the sanction takes full effect. This will further raise the price of oil in the market.

Speaking further, he said: “The market might continue to record increased instability as Nigeria will not be able to meet its quota, apparently because of increased pipeline vandalism, oil theft and illegal refining in the Niger Delta.

 “Overtime, the oil and gas companies have not been investing much, partly because of the delay associated with the passage of the nation’s Petroleum Industry Bill, PIB, which has now become an Act. Consequently, a lot of investments went to other nations, leading to the low production capacity of the country.

“The nation’s ageing facilities also affected the industry. Unlike in the past when Nigeria was able to increase production to support OPEC whenever other nations had problems, Nigeria cannot do so at this time, we still struggles to produce about 1.2 mbpd as against 1.7mbpd. It is only when we add condensate that is when our production capacity can average at 1.4mbpd.

“It is a major crisis for us as a nation, it just perturbing that we have allowed this to get to this point. A substantial volume of Nigerian crude is been stolen and shipped out of the country.

“We are aware of the recent incident in the Niger Delta which led to the death of over 100 persons. So pathetic that Nigerian security agencies have not been able to curb this menace. We have a major crisis here. There is a big conspiracy going on there.”

Dr. Fawibe, who advised the government on the way forward, further said: “President Buhari had forced out the security operative to clear this development of oil theft and vandalism, so sad it had to wait until the president gave an order.

“So sad that these vandals operate anytime, you wonder where the security, stallholders, and community elders are when these people are operating. All stakeholders, local government, state government, elders, and security operatives should come out to end this. There must be a combination of technology and human effort to ensure we curb the menace.”