Opec Grants 7 % Increase in Oil Output
allafrica.com Mike Oduniyi Lagos
OPEC agrees new ceiling of 24.5m bpd _NNPC, JV Partners to meet
Nigeria's official crude oil production quota has been increased by another 124,000 barrels per day (bpd) to 2.018 million bpd, giving a boost to Federal Government's finances for the 2003 fiscal year.
The seven percent increase in the country's quota (the largest production quota Nig-eria was getting in two years), came after the Organization of the Petroleum Exporting Countries (OPEC) agreed at its 123rd (Extraordinary) meeting yesterday in Vienna, Austria, to raise its ceiling from 23 million bpd to 24.5 million bpd, with effect from February 1, 2003.
Nigeria's quota had earlier been raised by 107,000 bpd to 1.89 million bpd effective this month over last year's level of 1.78 million bpd.
OPEC had called the emergency meeting in response to sharp drop in oil supply to the world market occasioned by the crippling strike in Venezuela, the group's third largest producer.
The shortage in supply had fueled a sharp increase in oil prices, hovering above $30 per barrel in the last three weeks.
"Having reviewed the oil market situation, especially the demand/supply picture for the first quarter 2003, and in light of tconference decided to raise the OPEC-10 ceiling from 23 mb/d to 24.5 mb/d, with effect from 1 February 2003, in order to ensure adequate supplies of crude to consumers and restore balanced market conditions," OPEC said in a statement posted to its website.
"The conference reiterated its hope that a swift and peaceful resolution of the present situation in Venezuela could be found, in both the interests of the people and government of the country.
"In this regard, the conference extends its support to Venezuela in its efforts to restore its market share.
"The adjusted ceiling will be reviewed at the next ordinary meeting of the conference, which ministers re-confirmed would take place on 11 March 2003.
"Member countries affirmed their commitment to the new production level and their intention to ensure that prices remain within limits deemed acceptable to both producers and consumers."
The decision, according to analysts, was expected to calm the market and prevent further price increases, although some analysts thought the increase was not enough to fill the gap in oil production caused by a continuing general strike in Venezuela.
The latest development represents a booster for the Federal Government, which faced hard times last year following shortfall in oil income. Oil exports account for more than 90 percent of Nigeria's foreign exchange earnings.
President Olusegun Obasan-jo's 2003 budget predicated on a total revenue of N1.819 trillion, envisaged oil earnings at N1.120 trillion based on a production quota of 1.788 million bpd based on official selling price of $22 per barrel.
Meanwhile, the Nigerian National Petroleum Corporation (NNPC) and the chief executives of joint venture oil companies will meet this week to work out modalities for the management of the increase in the country's oil production.
THISDAY checks reveal that the talks will also center on Nigeria's response to call for more crude oil supply to the international market as well as implementation of some Federal Government's directives on local content inputs in the oil industry billed to take off this month.
Preliminary discussions on management of new crude oil production was held in Lagos at the weekend between the NNPC management led by the Group Managing Director, Mr Jackson Gaius-Obaseki and Shell Petroleum Development Compa-ny (SPDC) led by its Managing Director, Mr Ron Van de Berg.
The Federal Government had been joggling figures on how best to accommodate oil production from a series of new deepwater fields expected to come on stream later this year into its OPEC quota, which only got a booster yesterday.
Presently, output capacity has even grown much from existing onshore and offshore fields as well as shallow waters, reaching 2.8 million bpd by the end of last year.
For instance, Shell's shallow water field, EA, came on stream last December with capacity expected to grow to 140,000 bpd and is yet to be accommodated in Nigeria's OPEC quota.
More concern for the Federal Government is when deep offshore fields developed under Production Sharing Contracts (PSCs) are completed, meaning that the government would not share from profits earned from oil exports from the fields until the operators recoup their investment.
Italian oil firm, Agip, is expected to begin production from its deep offshore field, Abo, early next month. So also is TotalFinaElf's Amenam offshore field that will produce around 125,000 bpd in June this year.
Sources, however, said that this week's talks will also dwell on implementation of government's policies on local content inputs in the oil industry, billed to commence this month.
These include achieving 30 percent local content in all oil projects, execution of engineering design of projects in the country, and conducting technical evaluation and project review in Nigeria.
The National Petroleum In-vestment Management Services (NAPIMS), an NNPC subsidiary is charged with the implementation of these policies.
Gaius-Obaseki who dropped the hint of the challenges facing the industry in the days ahead, said in Lagos at the weekend that the corporation aimed at sustaining the growth it achieved last year. He said that the government would surely come up with solution to the issue of production from joint venture fields and PSC fields "to the best interest of the country."
"We have been having series of meetings since December 27 (2002), to address immediate issues of having no interruptions," said the NNPC chief.
"Recently, we have an increase in quota, and an emergency meeting comes up on Sunday (yesterday) to take a decision on further increase. We intend to sustain the growth which we commenced earlier."
Gaius-Obaseki said Nigeria was capable and ready to raise oil supply to the international market if called upon to do so.
"We are ready, and fully prepared to meet any call on us for more oil," said the NNPC chief.
"In fact what should worry us is if we are told to shut down. Our capacity has grown tremendously recently," he added.