OPEC to raise output soon as oil prices soar
By Yakubu Lawal, Asst. Energy Editor
OSTENSIBLY to check the surging price of crude oil in the international market, the Organisation of Petroleum Exporting Countries (OPEC) may next month raise output to about 30.5 million barrels per day (mbd). The present production level stands at 26mbd.
Also, the organisation is expected to fix a new range for its target price band when ministers meet on September 15, 2004 in Vienna, Austria.
OPEC president, Purnomo Yusgiantoro was quoted as saying, the oil body will decide on new price band for its types of crude.
"OPEC will decide on a new range of price band at its next OPEC meeting on September 15 in Vienna," Purnomo stated.
But OPEC headquarters, according to agency report, has estimated that output could be raised to 30.5million barrels per day next month.
The implication for Nigeria and other member nations is that each country will be expected to produce at its full potential or capacity.
Nigeria, with current output level of 2.4 mbd, may be forced to increase supply to as much as 2.6mbd in order to achieve its 70 per cent `share of OPEC production quota.
"OPEC is pumping at its highest level since 1979 and a report from the organisation's headquarters estimated it could raise production to 30.5 million barrels per day next month" the report stated.
The Federal Government has already realised oil revenue in excess of ever N300 billion from high prices, and may earn additional N261 billion before the end of the month.
OPEC has suspended its quota system which now affords the member countries to produce to their capacity in order to meet its desire to bring down the prices.
The world largest producer Saudi Arabia, has pledged to raise supply by 1.3 mbd, while Libya and Algeria plan to add a total of 70,000 barrels per day.
Meanwhile, oil prices struck a fresh record yesterday spurred higher by renewed violence in Iraq and fresh evidence that strong demand growth in China and India has not been slowed yet by higher energy cost.
U.S. light crude rose 68 cent to $47.95 a barrel, a new record, and London Brent gained 75 cent to $43.78 a barrel. U.S. prices have set record peaks in all but one of the past 15 trading sessions and are up more than $10.50 a barrel, 28 percent, since the end of June.
Attack by Iraqi rebels saw mortars kill five at a Najaf police station and a domestic oil pipeline in the north blown up. Mortars also hit the Green Zone compound in Baghdad housing Iraq's interim government.
Rising world oil demand has left little slack in the system to cope with outages in Iraq where Shiite militia have said they will target oil infrastructure if U.S. forces do not leave the holy city of Najaf.
Iraq's main southern pipeline from Basra oilfields has been shut since a sabotage attack on August 9, curbing export flow to about a million barrels daily, half normal rates, through a secondary line.
"Once things return to normal, export will be back to normal," Iraq's oil minister Thamir al Ghadhban told Reuters.
Demand growth in emerging economies China and India has shaken up the oil market this year, intensifying competition for supply with established consuming giants such as the U.S.
China's refineries have processed 17.2 per cent more crude so far this year than in 2003, the country's State Statistical Bureau said yesterday. Crude imports to end-July have soared to 40 per cent from last year.
India's biggest refinery, Indian Oil Corp. Ltd, said it expected India's crude oil imports to rise by 11 per cent in 2004/05 as demand rises by nearly four percent.
In the U.S. which guzzles around a quarter of the world's oil demand so far this year is up by 3.4 per cent, stopping inventories building much as rising consumption absorbs extra imports from OPEC producers such Saudi Arabia.
