As members of the Organisation of Petroleum Exporting Countries, OPEC, prepare for the joint ministerial monitoring committee meeting in Russia, Nigeria on Wednesday expressed commitment to support all resolutions to stabilize the international oil market.
The meeting is scheduled for July 24 in St. St. Petersburg.
Although Nigeria, a prominent member of OPEC, was invited to the meeting, Minister of State for Petroleum Resources, Ibe Kachikwu, expressed regrets that he would not be able to attend as agreed earlier due to exigencies of other official commitments.
The minister told journalists in Abuja that he had already informed his Saudi Arabian counterpart that he would not be able to make, as he would be hosting a two-day meeting of the 17 African ministers of Petroleum Producing Countries, AMPOC in Abuja on the same day.
“After the meeting, I will dialogue with other members from Russia and Saudi Arabia to further explain Nigeria’s position,” Mr. Kachikwu said.
The minister assured that there was already a consensus among members on what the position is, and what needs to be done.
“There is no disagreement on that. All of us in OPEC are very united and focused on what needs to be done to stabilize the market. We will play our role. We will call on all those who are also producing, who are not members of OPEC, to continue to support the process of stabiliding the market for the common good of all,” he said.
“Nigeria is a firm member of OPEC. We have been active in the organization for 46 years. We will continue to be very active. We will continue to support what OPEC is doing to stabilize the market.
“All serious OPEC members will support the cut to have a stable, predictable production. Nigeria is a very difficult terrain that needs to be watched carefully for some months, to ensure that the peace we see is sustainable,” he added.
With crude oil price currently hovering around $44.70 a barrel, the minister said it was on a good trajectory, although he noted OPEC members would be more comfortable with the price band of $55 and $60 per barrel.
He blamed the lingering low crude oil prices to increased aggressive shale oil production by the U.S., although he noted that Nigeria and Libya were currently being shielded from the pressures due to the exemption from output cut policy granted the duo by OPEC last January.
PREMIUM TIMES recalls that the exemption, which was initially for six months, was extended for another nine months.
With Nigeria barely in the second month of the reviewed exemption period, Mr. Kachikwu said the country is gradually recovering production losses suffered for over one and half years in 2014 due to renewed attacks on oil facilities by Niger Delta militants.
“Nigeria is beginning to recover from the difficulties it had as a result of the loss in oil production. Over the last one and a half months, we have begun to recover some assets destroyed by the militants. But, the recovery is very gradual.
“The country is still below the benchmark of 1.8 million barrels set by OPEC for Nigeria. Over the next one or two months, hopefully we can get to that point where we can say the recovery could be tested,systemic and predictable,” the minister said.
Some OPEC members have said they would be calling for a review of Nigeria and Libya’s exemption in a bid to further raise oil price. It is, however, not certain if that would be agreed at the July 24 meeting.
Given Russia’s cooperation and the support of non-OPEC producers, Mr. Kachikwu said, the dialogue must be sustained to maintain the price level, which has remained stable in the last one year.
He said Nigeria had established an internalised mechanism for control to manage the gradual price movement in the market, by ensuring that not all the barrels it was capable of producing was injected into the market immediately.
Barring fresh attacks on oil facilities, the minister said, Nigeria hopes to manage the recovery process for the next four to six months, with the country’s production level at about 1.7 million barrels,excluding condensate.
The volume is below the OPEC benchmark production level of 1.8 million barrels set for Nigeria.
On the impact of the slow production on Nigeria’s budget, Mr. Kachikwu said with projected 2.2 million barrels and benchmark price of price of $42.50 per barrel approved in the budget, the country lost about four months due to delay in the approval of the budget.
Although he noted a production differential, the minister said the Ministry of Finance and the Executive Council of the Federation were looking at ways to cover the shortfalls through efficient management available of resources, by cutting down on expenses.