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Looking Beyond Oil Price Collapse Towards Post Recovery Savings (Part 2)
By Austin Okere
I will attempt to share the justification for this projection from the insights expressed by experts at various fora, and my own informed postulations.
Depending on which expert you talk to, and the perceived direction of the Chinese economy, you get three different views; a school of thought holds that the price of oil may be far from the top but closer to the bottom, while others believe that oil price will bottom out at about $20 per barrel. Yet another group holds that Oil price has reached equilibrium and will oscillate between $40 and $45 per barrel.
The optimists believe that oil price will recover to between $70 and $80 per barrel towards the end of the year, and remain within that band, as a sustainable balance between demand and supply is reached.
According to the 2015 OPEC annual statistics bulletin, world crude production in 2014 was 73.4 million barrels per day (mbpd) while demand was 91.3mbpd.
With the significant scale back in shale production arising from the steep price drop from late 2014 to levels that make shale production unviable, it will be safe to assume that production has dropped considerably while demand has more or less remained steady.
The major issue for me is the question of the so called glut. If there is indeed a glut, what is the accurate size of the glut and therefore, how long will it take for supply and demand to balance out.
I listened to an expert at a recent forum argue very eloquently against the widely touted 850 million barrel excess crude inventory.
Based on the data he and his firm have meticulously collected, he believes that the excess supply cannot be more than a quarter of the touted figure.
This means that the glut is overstated by 600 million barrels. Meanwhile, Iran’s return to the market has been less dramatic than the Iranians said it will be, adding only 220,000 barrels per day (bpd) in February 2016 according to the International Energy Agency (IEA); only a fifth of their forecast of 1mbpd.
The IEA also believes that non-OPEC output will fall by 750,000 bpd in 2016, while US production alone will decline by 530,000 bpd this year.
The other possible disrupter to oil is the incentive to explore alternative forms of energy such as renewables, majorly solar and wind, in response to the impending carbon tax fuelled by fears of global warming and pollution.
According to Amy Jaffe and Jeroen van der Veer, leading experts on global energy policy, factors such as technological advancements, the falling price of batteries that power electric vehicles, and a post-COP21 (UN Climate change conference in Paris in 2015) push for cleaner energy could drive oil use below 80 million barrels a day by 2040.
These threats to oil do not seem practical on a meaningful scale in the near to medium term.
The example in Germany seems to buttress the fact that renewables may not make sense in Europe and other cold climes, and that they can only be achieved with very steep and unsustainable subsidies.
It is reported that Germany, the poster boy for renewables has so far invested about $500b on wind and solar energy. And yet renewables account for only 3.5% of global energy use, while oil and gas accounts for as much as 60% (this excludes shale, peat and coal, which account for 10%).
Electricity accounts for 18%, while biofuels and waste account for the balance 12%. In simple terms, the eight major oil companies, with a cumulative valuation of $1.4trillion generate as much as 20 million barrels per day versus the $2trillion invested so far to generate the equivalent of 7million barrels of oil per day in renewable energy. How sustainable is this huge subsidy?
For the switch to electric cars to happen, we would need to replace refineries producing petrol with power plants that will produce the additional electricity required to charge the electric cars. How quickly can this switch happen, even if it were practical?
My theory on the oil narrative is as follows: Saudi Arabia being the biggest reserve holder wanted to drive the shale producers, whom they saw as ‘squatters’ out of the market.
They opened their taps to drive prices down, knowing that shale needed an oil price of above $40 to produce at break even.
The high oil prices were driving cheap capital into shale and improving technology and yielding high returns and thus attracting more capital and repeating the cycle, thereby iteratively making shale a bigger threat.
I believe that the Saudi plan was hijacked by the Oil traders, who thrive on price arbitrage fuelled by uncertainty.
They rode on the back of increased Saudi production to shout ‘oil glut’! They increased the FUD (fear uncertainty and doubt) with news of huge inventories coming on stream following the lifting of sanctions against Iran, but the general view is that Iran’s oil was already finding its way into the market through the back door, resulting in an insignificant net increase in supply.
It then became a self-fulfilling prophesy which snowballed, with the producers pumping recklessly to maintain market share and preserve earnings, which drove prices further down, exacerbating a bad situation.
I believe that the oil traders and bankers are trying to make up for a lost bet on the back of overenthusiastic exposure to the oil market. This is captured by the screaming headline in the Financial Times of March 22, 2016 ‘$150b losses on energy company bonds spur default fears’.
The article further states that the total debt among oil and gas companies including loans almost tripled from $1.1trillion in 2006 to $3 trillion in 2014 quoting the Bank for International Settlements.
Twenty of Europe’s biggest banks have energy loans totalling $200b, enough to wipe out a quarter of their common equity, while twenty of the leading US banks have loans totalling $115b or 11% of their equity.
With the desperation arising from a risky bet gone awry, one does not need to dig too deep to glean a motivation to drive prices down, buy on the cheap and subsequently sell on the high to cover the huge debts.
I believe that in the end, the market will wave its magic wand, and supply and demand will correct themselves and reach equilibrium with price. You cannot hide a pregnancy for too long.
It is not at all surprising that the heads of the world’s largest oil trading houses, six of which sell enough oil to meet almost a fifth of global demand were unanimous in calling for an end to the two year price slump at a Financial Times conference in Lausanne.
What should be more important to all of us, beyond these theories is whether Nigeria will finally learn from her past mistakes and institute a mechanism for saving when oil prices rebound, as I believe they eventually will. And what if the optimists are wrong, and prices do not rise. We would have lost nothing.
We would have learnt to diversify away enough from oil to live comfortably within the current price. If on the other hand the optimists are right, then we will save the equivalent of $36.5b per year (i.e. 2.5mbpd X extra $40per barrel X 365 days).
In any case we would have nothing to lose by preparing and having to wait a while longer than anticipated. Success only happens when opportunity meets preparation.
Austin Okere is the Founder CWG Plc and Entrepreneur in Residence, Columbia Business School, New York. He also serves on the World Economic Forum Business Council on Innovation and Intrapreneurship.
Ola Olukoyede, executive chairman, Economic and Financial Crimes Commission (EFCC), has denied claims that he compelled Bayo Ojulari, group chief executive officer, Nigerian National Petroleum Company Limited (NNPCL), to step down from his role.
Bayo Ojulari,
The allegations stemmed from an August 2, 2025, online publication which alleged that Olukoyede and Adeola Ajayi, director general, Department of State Services (DSS), pressured Ojulari into signing a resignation letter during a closed-door meeting in Abuja.
The report also suggested that Ojulari was interrogated over his purported links to Olatimbo Ayinde, British-Nigerian oil mogul, who is reportedly close to key figures in the present administration.
In a follow-up story, the news outlet further claimed Ojulari was later invited to the Presidential Villa, where First Lady Senator Remi Tinubu reportedly opposed his resignation.
Responding to the allegations, Dele Oyewale, spokesman, EFCC< issued a statement on Wednesday on behalf of the Commission, noting that Olukoyede, through his legal counsel Adeyinka Olumide-Fusika (SAN), described the publications as defamatory and injurious to his integrity.
“The publications and the imputations conveyed by them are so damning and cannot be ignored or treated with levity,” the statement quoted.
Olukoyede denied any suggestion that he was acting at the behest of Ayinde or that his actions were influenced by external political figures.
A letter addressed to the editor of the publication, signed by Olumide-Fusika, reiterated the gravity of the claims and insisted on corrective measures.
“He, therefore, demanded that the medium acknowledge your wrongdoing, expressly admit that what you published and imputed against my client are false, apologise for it unreservedly and retract and pull down the stories from your newspaper website and social media handles,” the statement added.
Olukoyede said the story portrayed him as “someone that has betrayed and subverted public trust by submitting the authority of his public office and trust as Chairman of the EFCC to the dictates and directives of one Olatimbo Ayinde.”
Labelling the report as entirely fabricated, Olukoyede demanded an official apology and complete removal of the story from the outlet’s digital platforms within 48 hours.
PalmPay reinforced its commitment to data protection and youth empowerment with a ground-breaking partnership with the Federal Ministry of Youth Development to launch the Youth Data Protection Awareness and Training (YDPAT) Program, which is targeted at equipping over 1,000,000 Nigerian youths digitally over 3 years.
The training program, commissioned last week at the Shehu Musa Yar’ Adua Centre in Abuja, will focus on providing youths with the right knowledge and skills required to navigate the digital landscape safely. With over 70% of the Nigerian population consisting of youths, this is an important move to foster trust, security and youth-focused innovation.
Speaking at the launch, the Honourable Minister of Youth Development, Comrade Ayodele Olawande, commended PalmPay’s partnership in the actualisation of the program and described YDPAT as a bold step toward building a digitally literate and security-conscious generation.
In his words, “This is about building a privacy-first generation, one that is inclusive, future-facing, and globally competitive.” He also emphasised the low awareness of the Nigerian Data Protection Act (NDPA), 2023 and the critical shortage of certified Data Protection Officers (DPOs), despite over 500,000 data controllers operating in the country.
This position was equally supported by PalmPay’s Managing Director, Mr Chika Nwosu, who stated how data protection is as important as innovation in tech. He noted that PalmPay integrates privacy into every stage of its product development, ensuring that user information is safe.
Beyond ensuring data protection, PalmPay is committed to empowering young Nigerians with real opportunities for growth, with mentorship and internship placements for top-performing participants. It has led several youth-oriented initiatives, including the Purple Woman campaign, and Passing the Baton CSR for thousands of youths and women in urban and rural communities.
With a drive to achieve nationwide digital literacy, PalmPay is championing campaigns in Northern Nigeria, with more activations planned across various states.
Ekperikpe Ekpo, minister for State, Petroleum Resources (Gas), said it is working towards a renewed target of moving about five million homes to clean cooking by 2030.
Ekpo, made the declaration while delivering the ministerial address and remarks on Monday at the opening ceremony of the 48th Nigeria Annual International Conference & Exhibition (NAICE) 2025.
This year’s conference is themed ‘Building a Sustainable Energy Future: Leveraging Technology, Supply Chain, Human Resources, and Policy.’
He explained that the target can only be made possible through increased investment in gas infrastructure in critical projects such as the OB3 and AKK pipelines, progressing to deliver gas to markets nationwide; and promoting modular and scalable gas projects, including mini-LNG and CNG stations.
According to him, the government is also ramping up efforts to improve last-mile access and stimulate local economic activity and facilitate job creation through strategic public-private partnerships in the construction, logistics, and retail segments of the gas value chain.
“His Excellency, President Bola Ahmed Tinubu, GCFR, has placed gas at the heart of Nigeria’s energy strategy. His vision, aptly captured in the phrase “From Gas to Prosperity”, reflects our national ambition to utilise our abundant natural gas resources to fuel industrialisation, create jobs, and expand access to clean and affordable energy for all Nigerians.
“Over the past year, we have taken decisive steps in line with this vision. We have expanded gas supply for industrial use, prioritising gas availability for manufacturing hubs, power generation, and industrial corridors. As of today, I’ve been reassured that every gas offtaker currently receives the gas they require for their industrial processes; Rolled out the LPG Penetration Programme, distributing cylinders across the six geopolitical zones and empowering women and youth, promoting clean cooking.
“Under the Decade of Gas Initiative, we are also making meaningful strides to unlock value across the midstream and downstream sectors.
“Notably, we have facilitated the development of gas processing facilities and virtual pipeline systems, ensuring gas reaches off-grid and underserved communities, supported private sector investment in LPG and CNG infrastructure, including autogas stations, domestic cylinder manufacturing, and distribution networks, strengthened coordination via the Decade of Gas Secretariat, driving alignment and accountability across Ministries, Departments, and Agencies, Advanced the Nigerian Gas Flare Commercialisation Programme (NGFCP), converting waste to wealth while supporting environmental goals, secured presidential approvals to address legacy debts, incentivising upstream gas supply and stabilising the domestic market”, he said.
He also said the federal government has released much-needed financial support to project promoters via the Midstream Downstream Gas Infrastructure Fund (MDGIF).
“All these efforts are anchored on a single, resolute belief, which is that Nigeria’s gas must work for Nigerians, not just as an export commodity, but as a foundation for inclusive growth, national development, and energy security.”
Speaking on the four pillars highlighted in the conference theme – technology, supply chain, human resources, and policy –- the Minister noted that each plays a vital role in shaping Nigeria’s energy future.
On technology, he said the adoption of digital solutions, automation, and data-driven tools across the gas value chain is essential.
“From reservoir monitoring to distribution analytics, emerging technologies can enhance efficiency, reduce emissions, and optimise delivery. The Ministry continues to collaborate with industry players to foster digital innovation,” he said.
He explained that a strong local supply chain is essential to sustaining the gas economy.
“Through the Nigerian Content Development and Monitoring Board (NCDMB), we are driving localisation of equipment manufacturing, pipe production, and other critical components to reduce import dependence and build national resilience.
“Our human capital remains our greatest asset. We are committed to nurturing a technically sound, diverse, and future-ready workforce through continuous training, strategic academic-industry partnerships, and deliberate youth and gender inclusion policies in the gas space.
“The Petroleum Industry Act (PIA) has provided a solid regulatory and fiscal foundation. We are implementing market-reflective gas pricing frameworks, encouraging deepwater gas development, and enforcing domestic supply obligations to drive investor confidence and sector expansion,” he noted.
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