The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has attributed the rise in Nigeria’s foreign exchange reserves by about $20 billion to the oil production exemption granted to Nigeria in 2016 by the Organization of Petroleum Exporting Countries (OPEC) as well as the relative peace that has returned to the Niger Delta.
Kachikwu disclosed this in a podcast released by his office in Abuja on Wednesday.
OPEC members, Nigeria alongside Iran and Libya were granted exemption from a resolution by the OPEC to cut oil output by about 740,000 barrels per day so as to improve the price of oil which had gone too low. The decision has since propelled oil prices from below $30 per barrel to around $82 per barrel.
The nation’s external reserves recently hit a new high of $40.4bn, according to the Central Bank of Nigeria.
The last time the foreign reserves hit the $40bn mark was January 2014, before the crash in global oil prices, reaching a low of $23.6bn in October 2016.
Kachikwu in the podcast dwelt on how his shuttle diplomacy across OPEC member countries resulted in the production cut agreement that has helped shore up oil prices in the international market.
“The effect of this is that it has stabilized supply and our income. Our budget was largely funded and we began to see our reserves, for the first time, grow dramatically from an all-time of $25 billion to as high as $45 billion currently. This is about $20 billion movement in terms of reserves growth,” he said.
“All these could not have been possible if we didn’t solve the Niger Delta problem and if we didn’t get an exemption from OPEC to continue to produce irrespective of the cost. And, of course, the effect of this was that the prices of crude jumped, it moved from $25 per barrel to about $75 per barrel,” Kachikwu added.