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Stakeholders Seek Nigeria’s Withdrawal from OPEC
This Day Live ^ | 20 Jan 2015 | Ejiofor Alike

Posted on 01/21/2015 6:33:16 AM PST by thackney

Stakeholders in Nigeria’s oil and gas sector have queried the relevance of Nigeria’s membership of the Organisation of Oil Exporting Countries (OPEC) and urged President Goodluck Jonathan to withdraw the country from the cartel.

These stakeholders gathered at the weekend in Lagos at a symposium organised in honour of a former Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Ayodele Marinho, who celebrated his 80th birthday.

They argued that OPEC as presently constituted serves only the interest of Saudi Arabia and its Gulf allies, which have contributed in the plummeting prices of crude oil because of a selfish desire to maintain their global market share.

According to them, Saudi Arabia and its allies are only concerned about competition with the United States’ Shale gas and less concerned about the plight of the poorer non-Arab member-countries, which bear the brunt of the sharp drop in oil prices.

In his lead presentation, the Chief Speaker at the event and a former Minister of Petroleum Resources, Mr. Odein Ajumogobia queried the relevance of Nigeria’s membership of OPEC in face of the current economic challenges facing the country.

He said in the past 57 years of crude oil exports by Nigeria, the country had always been exposed to the risk associated with the rapid, unpredictable and substantial changes in oil prices.

“There are no mitigation measures other than the nation’s membership of OPEC, which have been in place despite the country’s mono economy for most of that period and with the potentially calamitous consequences of for our national budget ,mitigated only by reduced expenditure, debt or both,” he said.

“It is instructive that OPEC did not intervene in November 2014, as it had done in 2008, 1998 and on numerous prior occasions, to stem the slide of the price, by balancing the supply equation, even in the face of evident oversupply stemming from five million additional barrels from the United States Shale oil,” he added.

“At the heart of this matter on this occasion seems to be the desire of individual countries in OPEC, principally Saudi Arabia, and Arab States within OPEC- all with the exception of Libya with significantly increased production capacity- Iran, Iraq, Qatar, and United Arab Emirates (UAE), to protect and maintain their market share through the organisation, even if they have to, as they are indeed doing, individually selling their oil at discounted prices,” he explained. Also speaking, a former Group Executive Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Ibrahim Waziri also queried the relevance of OPEC to Nigeria in the face of the current realities in the international oil market.

He argued that the current global energy dynamics has shown that Nigeria is inconsequential in the OPEC setting, stressing that the country is a member of the cartel purely based on ego trip.

Waziri called on the federal government to limit her involvement in the oil and gas industry to collection of taxes, royalties and regulation of activities in the industry, pointing out that the management and operation of the NNPC should not be left in the hands of the government.

However, the position of a former Group Managing Director of NNPC, Mr. Funsho Kupolokun, differed from the positions of the other stakeholders at the event.

In his remark, Kupolokun cautioned against withdrawal of Nigeria’s membership of OPEC, stressing that such step would make Saudi Arabia to flood the market with oil.

According to him, the glut that will be created by such action will force a drop in oil price to an all-time low of $9 per barrel.


TOPICS: News/Current Events
KEYWORDS: energy; nigeria; oil; opec

1 posted on 01/21/2015 6:33:16 AM PST by thackney
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To: thackney

I just received an e-mail telling me that a relative left to me shares of a Nigerian oil company...


2 posted on 01/21/2015 6:36:55 AM PST by Army Air Corps (Four Fried Chickens and a Coke)
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To: thackney

Nigeria produces mostly light, sweet (low sulfur) crude oil of which the vast majority is exported to global markets. Crude oil production in Nigeria reached its peak of 2.44 million bbl/d in 2005, but began to decline significantly as violence from militant groups surged, forcing many companies to withdraw staff and shut in production. By 2009, crude oil production plummeted by more than 25% to average 1.8 million bbl/d. The lack of transparency of oil revenues, tensions over revenue distribution, environmental damages from oil spills, and local ethnic and religious tensions created a fragile situation in the oil-rich Niger Delta.

In late 2009, amnesty was declared, and the militants came to an agreement with the government whereby they handed over weapons in exchange for cash payments and training opportunities. The rise in oil production after 2009 was partially due to the reduction in attacks on oil facilities following the implementation of the amnesty program, which allowed companies to repair some damaged infrastructure and bring some supplies back online.

Another major factor that contributed to the upward trend in output was the continued increase in new deepwater offshore production. The government took measures to attract investment to deepwater acreage in the 1990s to boost production capacity and diversify the location of the country's oil fields. To incentivize investments in deepwater areas, which involve higher capital and operating costs, the government offered PSCs in which IOCs received a greater share of revenue as the depth increased. The first deepwater field began production in 2003, and since then, output from deepwater fields has added more than 800,000 bbl/d to the country's production capacity.

Although the amnesty program and new deepwater fields contributed to production gains, Nigeria's crude oil production began to decline again after 2011. Despite the start of the Usan deepwater oil field in February 2012, crude oil production in Nigeria slightly decreased from 2.13 million bbl/d in 2011 to 2.10 million bbl/d in 2012. Supply disruptions throughout the year and heavy floods in the fourth quarter of 2012 were the main reasons for the year-over-year decline.

Supply disruptions escalated in 2013, mostly stemming from pipeline damages associated with oil theft, which resulted in the shut-in of the Trans Niger Pipeline and Nembe Creek Trunkline and force majeure on the shipments of multiple crude grades. From January to November 2013, crude oil production averaged slightly below 2.0 million bbl/d, similar to the levels in 2008-2009 when disruptions hit record highs.

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3 posted on 01/21/2015 6:40:39 AM PST by thackney (life is fragile, handle with prayer)
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To: Army Air Corps

You lucky dog!


4 posted on 01/21/2015 6:41:03 AM PST by thackney (life is fragile, handle with prayer)
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