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Increase in Nigeria's production may cause friction in OPEC |
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Wednesday, 09 December 2009 |
 Increase in Nigeria’s oil production may reduce pressure on premium benchmark prices and cause friction in Organisation of Petroleum Exporting Countries (OPEC), according to an expert.
An internationally acclaimed energy expert, Mr. Vincent Lauerman, who
is the President of the Calgary-based consultancy, Geopolitics Central
said that Nigeria’s oil production rebounded to 1.9 million barrels per
day in October, which is about 80,000 barrels per day more than its
OPEC quota.
The energy expert, who pointed out that Nigeria’s oil production was a
“nasty mess at midyear,” as the insurrection in the Niger Delta
drastically cut the country’s crude oil production and caused it to
lose its position among African oil producers, said that increased
production could lower crude oil prices.
Lauerman said: “Now, much to my surprise, the country may be turning
the corner, with the Niger Delta insurrection on the decline and oil
production on the rise. If Nigeria’s oil production continues to
increase, it could lower crude oil prices and put the country on the
wrong side of the Organization of the Petroleum Exporting Countries
(OPEC).”
According to him, International Energy Agency (IEA) had disclosed that
Nigeria’s oil production slipped to 1.68 million barrels per day in
July 2009, which is about 46 per cent below its total capacity,
including 500,000 barrels per day of shut-in, compared with 1.7 million
barrels per day for Angola.
The international energy expert, who pointed out that Nigeria’s onshore
production had fallen to levels not seen since the 1960s, said that
since the end of 2005, militant groups under Movement for the
Emancipation of the Niger Delta (MEND) had attacked oil infrastructure
in the Niger Delta, which had reduced oil production and revenues.
On the Federal Government’s amnesty programme, he said: “I was
skeptical that the Nigerian government’s carrot and stick approach to
quell militant activity in the Niger Delta would pay dividends. The
Federal Government had shown little inclination to be drawn into
substantive discussions on issues underlying the crisis or to allocate
a greater share of oil wealth to the states where it is produced.
“In recent months, Nigeria’s President, Umaru Yar’Adua, the architect
of the amnesty, invited a number of rebel leaders to Abuja to persuade
them to lay down their arms and approved $1.34-billion in federal
funding to build roads, hospitals and schools in the Niger Delta region.
“More importantly, on October 18, the Federal Government announced a
plan to transfer a 10 per cent stake from the holdings of the Nigerian
National Petroleum Corporation (NNPC) directly to the delta
communities. Assuming the Nigerian parliament passes it, this
initiative is a brilliant move for two reasons.
“First, it bypasses corrupt state and federal politicians. Despite the
nine oil-producing Niger Delta states receiving an extra 13 per cent of
oil revenues under Nigeria’s constitution, the majority of the people
in the region live in abject poverty — less than one U.S. dollar a day.
“According to the World Bank, most of Nigeria’s oil and gas wealth has
been siphoned off by one per cent of the population. Between $300- and
$400-billion of oil revenue has been stolen or misspent by corrupt
federal and state government officials since independence in 1960.
“Second, this initiative divides the interests of the Niger Delta
people from the criminal gangs that ‘bunker’ oil. Although MEND
declared an indefinite ceasefire on October 25, with its most important
leaders accepting the amnesty, some of the groups under its umbrella
are no more than criminal gangs. About 10 per cent of the oil produced
in Nigeria is stolen from pipelines through industrial-scale theft,” he
explained.
Source: Compass News
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