OPEC yesterday in Abuja reached a consensus to effect a production cut of 500,000 barrels per day but effective February 1, 2007. This immediately sent oil price in the international market above $62.
President Olusegun Oba-sanjo, while addressing the 143rd Extraordinary meeting of the cartel, also called its member states to take steps to check the overbearing control of the global oil industry by industrialised nations, most of whom lack the natural endowment of the resource. He called for more collaboration among members to achieve this.
OPEC�s move to cut production and wait till February before it would be effected to avoid imposing an excessive squeeze in the coldest month of the year in the northern hemisphere.
But for Nigeria, the development would translate to another 42,000 bpd cut in output in addition to the 100,000bpd cut effected in November.
Daukoru who presented the organisation’s communique at the end of the meeting explained that the decision was necessary to stabilise the global oil market and meet the demand and supply expectations for next year.
“The conference also noted with satisfaction that the decision it had taken to reduce production by 1.2 million bpd as of 1st of November 2006 had succeeded in stabilising the market and bringing it into balance, although prices remain volatile, reflecting the continuing supply overhang in the market.
�In view of this, the conference decided to reduce current OPEC production by 500,000bpd with effect from Feberuary 1, 2007,” Daukoru said.
He explained that while reviewing oil market outlook, including the overall demand and supply expectations for the year 2007, in particular the first and second quarters, as well as the oil outlook for the oil market in the medium term, the conference observed that market fundamentals clearly indicated that there was more than ample crude supply.
“We are a responsible organisation and we do not cut supply production to starve the world of oil. We cut crude production when the market is over supplied. Why should we be pumping crude oil when refineries are not able take it�, he asked.
But Angola, which was admitted into the organisation as a full member was exempted from the production cut on the ground that the country was, technically not a member of the organisation when the decision of the cut was made.
The conference also announced the appointment of Mr Salem El Badri from the Socialist Peoples Libyan Arab Jamahiriya as Secretary General of the organisation with effect from January 1, 2007 and announced that the third summit of OPEC Heads of states and governments will take place in the Kingdom of Saudi Arabia in 2007.
Meanwhile, President Obasanjo, while addressing the Abuja meeting called on OPEC member states to take steps to check the overbearing control of the global oil industry by industrialised nations, most of whom lack the natural endowment of the resource.
He said member countries must pool their technical expertise together to reduce undue dependence on technology and human resources outside OPEC.
There have been growing concerns over the rising production cost resulting from very expensive technical services from experts in industrialised nations, which has put a lot of pressure on revenue accruing to petroleum producing countries, from the exploitation of the resource.
Obasanjo said OPEC should rise to the present challenges posed by the industry through the forging of more effective collaboration among member states to ensure self reliance in terms of high-tech services, therefore increasing OPEC’s control over oil and gas resource earnings.
“OPEC’s statutory objectives of stabilising the international oil market is made more difficult by extraneous factors like cost of services, which has witnessed dramatic increase in recent times. It appears that what our countries have gained from controlling our God-endowed natural resources is now being lost through the near total domination of the service sector of the industry by a few foreign companies.
“Admittedly the oil industry is capital intensive and high-tech, thus giving advantage to the industrialised nations. However if we pool our expertise together, share experiences, research findings and technologies, I do believe that we would soon come to effectively control not only our resources but also the technology for exploiting them,” Obasanjo said.
He added that OPEC countries deserve to get the full value of their resources in order to build a solid foundation for their economies and improve the living standards of their people.
Dec152006