The Federal Government on Friday said it was averse to skyrocketing oil prices because of plans by some countries to dump oil and go for other sources of energy.
The Minister of State for Petroleum, Mr. Edmund Daukoru revealed this in Abuja during a media parley ahead of the 143 Extra Ordinary Conference of the Organisation of Petroleum Exporting Countries, scheduled to hold in Nigeria for the first time between December 13 and 14.
According to him, having oil prices hit 70 dollars per barrel and above was inimical to the future and economy of all the oil producing and exporting countries.
Daukoru, who was responding to questions on why the government always felt uncomfortable with high oil prices said, If they remain at that astronomical level, you are courting trouble because alternatives would be considered and people would begin to invest heavily in the alternatives. Presently there are substantial investments in bio-ethanol and wind energy.
Major companies are beginning to see wind as potential alternative source of energy. If you fly low over Europe, you will see that the landscape is dotted with wind mills.�
He argued that the best strategy to stop major investments in those alternative sources of energy was to keep oil prices at a moderate level, whereby the exporting countries make enough money but also make the alternatives unattractive.
Daukoru explained that the Federal Government was not averse to alternative sources of energy, but was only disposed to an energy mix, which would not dislocate Nigerias comparative advantage as a major oil producer.
According to him, We would not throw away the natural advantage we have. Nigeria would be foolish to abandon its comparative advantage and join the bandwagon to develop competing sources of energy.
Oil remains on a unit basis, still the cheapest and most convenient fuel for our day and it is not about to run out.�
He added, Even within Nigeria, to get gas to certain nooks and crannies is not easy. There is room to develop solar energy for isolated communities, nuclear energy to generate electricity, and also hydro, for electricity. It is a total energy mix that we talk about and not just to embark on alternatives, just for the purpose of displacing oil.�
He said some countries were envious of the oil-producing counterparts and were working towards embarking on high cost alternative sources of energy for the sole purpose of displacing oil.
On the suggestions that OPEC was going to impose further cut backs on the production quota of their member countries at the Abuja meeting, Daukoru, who is the current OPEC President, said world oil prices respond to certain factors, which included production levels and production capacity.
He maintained that if producers did not moderate their supply, they would invariably flood the market and crash the price.
He said maintaining a good price was critical, adding Nigeria currents production in the Niger Delta had dropped from 2.4m barrels to at one stage, 1.8m. Now it is back at 2m. If not for the good prices we have had, our revenue projection would have gone awry.�
Admitting that OPEC currently controls just about a quarter of oil exporting countries, left with only 10 active members, after Iraq got engulfed in a war,
Daukoru said the body still played the role of a moderator.
He expressed optimism that the organisation would have 50 per cent of oil producers under its membership by the year 2020 or 20/25.
He said the body had embarked on membership drive, adding that and Angola were being persuaded to join, so as to share in the benefits as well as the burden.
On why oil prices were dipping, he explained, Normally in the first quarter, which is partly winter and getting out of winter, prices are high and they reflect the price levels of previous December. And then they go into a deep in the second quarter before rising again in the third quarter and the last quarter they are high again.�
He said cut backs by OPEC do not achieve instant reactions in the market partly because of the supply by non-OPEC countries, adding that the desired effects are achieved ultimately.
He dismissed insinuations that top oil consumers were boycotting OPEC countries, maintaining that supply from OPEC countries were in top demand, especially the grade produced by Nigeria.
Nigerian crude is highly sought after, we dont even have enough to go round because everyday we get applications of people who want Nigerian crude.�