Nigeria against increase in OPEC’s production level
Ajumogobia had stated that Nigeria will not support an increase in production quota because consumers have enough crude and that speculators, a weak dollar and political tension are responsible for high prices in the global market.
He said the fundamentals of supply and demand of crude oil do not support an increase of 500,000 barrels per day (bpd) to the global market. According to him, the lack of support by these fundamentals contributed to the sharp decline in prices last week after closing at nearly $100 per barrel.
"If there is shortfall in supply, it would have been difficult for us to experience a drop of $11 per barrel within a week before the increase of $4 per barrel on Monday. The increase in prices on Monday is a temporary thing which is expected to decline after the meeting," he said.
In the same vein, Williams Edwards of Edwards Energy Consultants attributed the surge in prices of crude oil in the last four years to the impact of speculative trading. He noted that OPEC should continue to provide the global market with the necessary volume that would not impact negatively on investment. He commended the organisation for responding to the high prices with increase in production quota in the past after examination of necessary variables.
"Members of OPEC should continue to play their roles effectively. In the case of consumer nations, they are looking at the situation superficially. If the organisation announces an increase in supply of 500,000 bpd, they will see it as a good measure to make more crude oil available. This however would not be favourable to both of them in the long run", he warned.
Paul Cardoso of Pemex Oil, Madrid, Spain, supporting Nigeria’s position, pointed out that the energy market was reasonable and well supplied with crude oil. He noted that there was no need to increase supply of crude oil to the international market by OPEC member nations since there were lots of factors that come to play in the determination of high prices of crude oil by OPEC "There is enough oil in the market and global market itself is not ready for additional supply. Hence, there is no need to increase production capacity", he suggested.
The energy industry analyst noted that it would be a wrong decision if OPEC should increase supply because the consequence of such a decision would not be favourable in the next quota.
He added that the consequence of such a decision would reduce investment in exploration programme and development of new fields by oil firms as a result of the high contract cost being charged by oil services firms for projects as a result of the existing high crude oil price.
"The best for producers now is to maintain the current production level and not allow pressure of the consumer nations to make them take a decision that would bring another setback for investment in the global oil and gas industry", he noted.
However, majority of the ministers of energy from OPEC member nations attending the conference refused to comment on what may be the outcome of the meeting today except Shokri Ghanem Libya’s oil minister, who said that the market is well balanced and does not need anything.
Some of the delegates on arrival at Emirates Palace,venue of the meeting in Abu Dhabi said the organization will continue to play its responsible role of ensuring stability in prices which does not necessarily mean that an increase in supply will be the only solution.
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