FG Directs Oil Majors to Raise Output
Fear of crude shortage pushes prices high
By Mike Oduniyi
The Federal Government may have approved a further increase in crude oil production from new fields operated by three of its multinational joint venture partners, in response to call by the Organisation of Petroleum Exporting Countries (OPEC) on members with spare capacity for more oil.
Fears that oil supply by producers might not meet growing demand for the commodity worldwide, have continued to push price higher in the international market, where it reached yet a new record of $45.13 a barrel yesterday.
THISDAY checks revealed that Nigeria, which produced 2.41 million barrels per day (bpd), had already indicated to OPEC that it could readily make available a spare capacity production of 90,000 bpd of crude.
Specifically, Shell, Exxon-Mobil and the Nigerian Agip Oil Company (NAOC), are to raise production from their new fields namely, the EA shallow offshore field, Yoho and Okpoho offshore fields and Abo deep offshore field.
While Shell EA oil field with capacity to produce 140,000 bpd had been producing at average of 100,000 bpd, ExxonMobil's Yoho offshore field currently average 120,000 bpd of its 150,000 bpd capacity.
Agip's deep offshore field with estimated reserves of 800 million barrels of crude and production capacity of 150,000 bpd, had been producing at an average of about 50,000 bpd, while the Okpoho field (which Agip operates jointly with the Nigerian Petroleum Development Company) produces at an average 20,000 bpd from its 50,000 bpd capacity.
The levels of output from these fields had been limited by the quota allocated to Nigeria by OPEC.
The target, according to sources at the Ministry of Petroleum Resources, is to achieve a production level of about 2.7 million bpd for this month, compared to the country's OPEC quota of 2.141 million bpd.
"The production level could have been more but for some fields shut in due to community problems," a senior ministry official said yesterday.
US oil major ChevronTexaco still have about 145,000 bpd of crude production shut in following the closure of all its facilities in the swamp of Delta State due to community-related problems. Shell on the other hand is losing some 20,000 bpd to the same problem.
Nigeria's oil production was bolstered to around 2.6 million bpd last June, with Shell alone raising production by 70,000 bpd. It, however, dropped to an average 2.41 million bpd following the closure of all Elf's oil fields due to industrial crisis.
The Federal Government, which has already raked in excess oil income of over N300 billion from high oil prices, may earn some $2 billion (N266 billion) this month alone, from the exports of its 57 percent shares of the oil produced.
OPEC has tacitly suspended its quota system which allows its 10 member-countries including Nigeria to produce to their capacity in order to bring down prices.
According to the petroleum ministry officials, all the OPEC members were planning to make available additional one million bpd before the end of this year.
OPEC and the world's biggest producer Saudi Arabia, has already pledged to raise supply further by 1.3 million bpd, while fellow African countries Libya and Algeria plan to add a total of 70,000 bpd.
The price of oil has reached yet new record highs due to continuing concern at the ongoing violence in Iraq.
The light crude rose 33 cents to $45.13 a barrel while the Brent crude climbed 50 cents to $42.07 a barrel.
The threats of attacks on Iraq's oil pipelines have forced its officials to close one pipeline as a precaution, and oil exports are down by half.
Iraq is only currently able to export oil at a rate of 41,000 barrels an hour, compared with the usual 80,000. "Everything's gone wrong in the oil market recently," an industry analyst said.
Meanwhile, Chevron said yesterday that it, in conjunction with the Ondo State Government organized a Joint Inspection Visit (JIV) to some coastal communities in Ondo State on Wednesday, to investigate claims that an oil spill impacted the communities.
The JIV team, it said, included representatives of the Depart-ment of Petroleum Resources (DPR), Federal Ministry of Environment (FME), and Ondo State Ministry of Environment. Also in the team were Ilaje Local Government and Ilaje community representatives. No oil spill impact was noticeable.
"The inspection team traveled the length of the coastal communities from Odun Yonren to Awoye in Ilaje Local Government Area, where recent community reports had indicated oil spill impact.
"Samples that look like weathered oil were collected for analysis at Odun Yonren, and patches of stained vegetation were spotted in a few other locations. Otherwise, the coastline and canal were clean and devoid of any oil deposits.
"The samples of weathered residues collected at Odun Yoren will now be compared with oil produced from CNL facilities to determine if they match," the statement quoted Mr. Amid Adekunle, Chevron Manager for Environmental and Regulatory Affairs as saying.
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