OPEC Gives Up on High Oil Prices
Operators want more funding from FG
By Mike Oduniyi with Agency report
The Organisation of Petroleum Exporting Countries (OPEC) said yesterday it could do no more to arrest rising crude oil prices, which hit its highest level in 25 years at $44 per barrel in the international market.
Oil producers in Nigeria have, however, called on the Federal Government to immediately seize the initiative in the rising global demand for crude, by providing more fund to boost oil production in the country.
OPEC President, Mr. Purnomo Yusgiantoro, stunned the international oil market, when he officially declared that the group was not in a position to meet the growing demand for crude oil.
According to Yusgiantoro, Saudi Arabia, the world's biggest oil producer had just revealed that they would need more time to be able to push additional volume to the market.
""The oil price is getting higher. It's crazy," Purnomo said,, adding, "Yes, There is no supply..."Yesterday (Monday), Naimi said that his country could produce more oil but it would take time," he said.
His comments, which sparked fears of imminent shortage among oil consumers, sent prices high with the September deliveries of the light sweet crude traded at a new all-time high of $44.24 barrel up from Monday's price of $43.82 a barrel.
The benchmark crude Brent closed at $40.45 a barrel, up 48 cents, marking the highest level traded since October 1990.
Traders blamed the shortage on problem and crisis in Iraq, where sabotage on the country's pipeline had crippled oil supply to the market.
"Iraq is a major headache for OPEC. But for its problem, OPEC could have been able to boost supply of about 3.5 million barrels per day of crude supply to the market," an oil industry analyst said in Lagos yesterday.
OPEC has been unable to do little to halt the oil price surge, despite raising its 10-member output ceiling by 2.0 million bpd last month by a further 500,000 bpd from August 1, this year.
Nigeria's Presidential Adviser on Petroleum, Dr. Edmund Daukoru, said in Abuja on Monday that oil consumers should also assist OPEC in cooling prices.
"OPEC has done its part, we are also calling on consuming nations to also do their own part. They should look at thier internal taxation system that is fueling gasoline prices, look at their internal consumption pattern and also the refining capacity," said Daukoru.
Although the upward review in OPEC ceiling raised Nigeria's oil production to 2.141 million bpd, the country is currently producing at some 2.6 million bpd.
Oil producers in the country said yesterday that the Federal Government should now focus on funding production more, away from current efforts on exploration to raise reserves.
"Because of the OPEC quota constraint, focus was before now on exploration. That is why Nigeria was not ready to bring up additional production capacity," said one industry source.
"Government spending now should focus more on funding production rather than exploration," he said.
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Engr. Funsho Kupolokun, had said on Monday that producers would require a yearly funding of $7 billion to substantially raise the country's oil output capacity.
Of this amount, the Nigerian government would need to put down, $4 billion. Failure to ensure adequate funding could see the country's oil production declining fast to a 1.0 million bpd from its current levels of 2.6 million bpd, he warned.
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