OPEC warns Nigeria, other developing economies of sustained COVID-19 impact

[By Sopuruchi Onwuka]

Organization of Petroleum Exporting Countries (OPEC) has admonished Nigeria, as well as other developing economies of the world to adopt resilient strategies for post pandemic economic recovery.

This is further as the organization warned that whereas the worst of the COVID-19 impacts might have been surmounted, the ripples of the pandemic would still linger into the future.

Secretary General of OPEC, Nigeria’s Dr Mohammed Barkindo, pointed out to virtual conference delegates that rising vulnerability of developing countries to global phenomena that shift demand base for petroleum energy has laid strong agenda for the oil producing member countries in advancing narratives that simultaneously promote energy diversification and poverty reduction.

According to him, policy advocacies by OPEC amplify the need to explore comprehensive options to climate protection especially now that developing countries and oil dependent economies currently suffer multiple impacts from the lingering novel coronavirus pandemic and the demand displacement caused by energy transition.

Dr Barkindo who was speaking at the forum hosted by the Nigerian Association of Energy Economists (NAEE) made it clear that Nigeria and peer oil economies have come under the triple whammy from the unfolding global economic downturn and environmental sentiments that affect oil demand.

The Oracle Today reports that oil prices took a steep plunge in 2020 following lockdown measures imposed by governments across the world in response to devastating wave of novel coronavirus disease, also known as COVID-19.

With social, industrial and sundry economic activities shut down across the globe, dust and emission pollution also dropped; sparking a new wave of environmental activism that propelled speedy transition from fossil energy.

While industrial economies sank into recession on account of acute drop in gross domestic product (GDP), oil producing countries also went down on account of drastic fall in market returns as demand waned and eroded crude oil value. 

Dr Barkindo explained that COVID-19 crippled the economies of poorer countries more than it did wealthier ones. He noted that the vulnerable economies had fewer cushions in place to deal with the devastating health and socio-economic outcomes of the coronavirus pandemic and less ability to immunize their citizens quickly.

He also pointed out that the pandemic “has had a devastating effect on their oil industries,” stressing that” the accelerated energy transition in light of the pandemic is encouraging a move away from fossil fuel use and investment.”

“They themselves are suffering and are likely to suffer some of the worst effects of climate change,” Dr Barkindo added.

In pressing home his points, Dr Barkindo reminded the audience that “oil is the mainstay of our country, contributing robustly to Nigeria’s total revenue and foreign exchange earnings,” adding that “shocks to this essential commodity affect the country’s entire economy.

In emphasizing the role of OPEC in helping protect member countries from market storms, Dr Barkindo stated that OPEC helps buffer shocks to enable developing countries have the required stability to plan their economy “with certainty and clarity.”

In narrowing down to Nigeria, Dr Barkindo stressed the role of the petroleum industry as the backbone of the country’s economy, explaining why, according to him, President Buhari also recognizes the importance of OPEC to the development of Nigeria’s oil industry.

“The good collaboration between OPEC Member countries has made it possible to accommodate both weak and strong players in the oil production industry. This has been very important, and a catalyst, to the development of Nigeria’s oil industry,” Dr Barkindo quoted President Buhari as saying in an edition of the OPEC bulletin.

Dr Barkindo made it clear that the COVID-19 pandemic constitutes an unprecedented event for the global oil industry and the world economy, pointing out that “no country or citizen of this planet has remained unscathed and the pandemic continues to overshadow 2021 as it did 2020.”

While holding up the fact COVID-19 remains a global health and economic pandemic over 2020 and 2021, he emphasized that oil-producing developing countries have been particularly hard hit.

“The unique OPEC and non-OPEC Declaration of Cooperation process and the collaborative effort continue to steer the oil industry through the tumultuous roller-coaster caused by the COVID-19 pandemic,” Dr Barkindo reiterated.