Oil producers want stable prices
Sunny Obidigbo,
Energy Reporter
AMAJOR challenge currently facing world oil producers is how to ensure sufficient availability of crude oil at stable prices, according to the Group Managing Director (GMD), Nigerian National Petroleum Corporation (NNPC), Mr. Funso Kupolokun.
Kupolokun who made the observation at the second yearly Aret Adam seminar on Perspective In the Energy Industry tagged: "Balancing Global and Local Interest- The Nigerian Accent" at the weekend, said that Nigeria would gain economically when the price was stable.
According to him, oil and gas are strategic commodities which play vital roles in fuelling the global economy, and any disruption in the oil market, not only affects the energy industry but also has consequence on the main thrust of globalisation.
His words: "The world is concerned about future oil supplies in view of anticipated increase in demand occasioned by globalisation, improvement in the standard of living, rapid communication and continued advances in technology which are expected to propel global sustainable economic development and growth".
The NNPC boss said that "the global economy is dependent on stable oil prices. So also are the economies of nations."
To this effect, he noted that Nigeria as a member of the Organisation of Petroleum Exporting Countries OPEC had taken measures to ensure price stability in the oil market to attain the benefit of sustainable growth in the world economy.
"However, high oil prices will slow down global output and economic development while low prices will adversely affect exploration and production activities.
"That's why Nigeria rigidly follows development in the market and complies with OPEC directives. To do otherwise is to make OPEC become irrelevant and create permanent instability in the market," he stated.
The GMD said that Nigeria as a major player in global oil supplies had contributed and would continue to ensure stability in the price of oil in the international market through quota allotted to it as a member of OPEC.
He said that Nigeria was mindful of the harmful effect of the existing ruling of price of oil in the international market and proffered that concerted efforts of both the OPEC and non-OPEC member countries should be deployed to arrest shortage of supplies in view of anticipated increasing demand.
"As at today, crude oil accounts for about 40 per cent of global energy mix because of its attributes which are better than those of other forms of energy," he said.
On account of this, Kupolokun stated that "Nigeria's interest is to align with the global interest on crude oil availability" to reflect the giant step taken by President Olusegun Obasanjo's administration since its inception about five years ago. The step, he added, was geared towards increasing crude oil reserve to 36 billion barrels and productivity to four million barrels per day by 2007, while 40 billion barrels reserve and 405 mbd productivity were expected by 2010.
"To achieve this target, a lot of investments in Exploration and Production (EXP) have to take place, he said, adding that "our Venture Partners (VP) are being encouraged through timely payment of cash calls to enable them carry out agreed work programme on schedule."
To have a greater scale of achievement in the area of globalisation, he called for proper macroeconomic policies, local content, capacity building and employment.
While painting a gloomy picture of future short supplies in the face of increasing demand of crude in the world market, Kupolokun said the worrisome trend needed to be arrested by the injection of $200 billion by 2010, adding that "this figure becomes more staggering if funding requirements of non-OPEC members are taken into consideration".
Already, according to the NNPC helmsman, the country is strategically pursuing her agenda to increase the crude oil daily reserve to more than the current production level of 2.6 mbd.
He said: "Furthermore, the Federal Government intends to offer a number of blocs to both foreign and indigenous companies, adding that this exploitation would be invigorated by attractive incentives to woo more investors into the industry.
"With all these, there is no doubt that the target will be met as we open up our unexplored basins and new frontiers while the existing blocs are also being fully explored", he said.
Earlier in his opening address, the presidential special adviser on Petroleum and Energy Matters, Dr. Edmund Daukoru said that the country would gain a lot from globalisation like the rest of the world since the world had become a "global village" with advancement in technology.
Dakoru who chaired the occasion, said the trend has reinforced the interdependence between countries that led to deregulation of the nation's down stream sub-sector of the oil industry.
He said that Nigeria had reaped from the advanced technological know-how in the production process of the oil industry.
Describing the prices of crude oil in the international market as alarming, he said that government had embarked on alternative funding to boost production to meet the demand, saying that government could not afford $7 billion for a daily minimum of 2.2 mbd production level.
According to him, even, at the current production level of 2.6 mbd by Nigeria, the oil price has continued to soar, adding that the country would contribute her quota by boosting her production level in the share content through alternative production funding.
Describing gas as a future global energy, the special adviser stressed the need for the monetisation of national gas through a number of gas-based projects that had either been commissioned, or in the pipeline to eliminate gas flaring by 2008.`
