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OPEC likely to retain output, says Daukoru
By Chuks Isiwu
Energy
Editor, Lagos
(with agency reports)
If Nigeria had its
way, the Organisation of Petroleum Exporting Countries (OPEC) would not
increase production at its ministerial council meeting in Cairo, Egypt next
week.
In fact, the country
is expected to pressure other members to ensure output remains unchanged at 27
million barrels per day (mbpd) to stabilise prices which will in turn protect
global economic growth.
Stating the likelihood
of OPEC retaining current output quotas at the December 10 meeting,
Presidential Adviser on Petroleum and Energy Matters Edmund Daukoru said its
production surge has eased prices slightly this month, but not enough to
warrant trimming back supply yet.
“Cutting
(output) is psychologically difficult. As for raising, there is a structural
problem,” Daukoru stated at the weekend in London.
He also referred to
the impact of the OPEC basket of seven crudes, last valued at $39.06 per barrel
(pb), saying: “If the basket were to collapse below $30 there would be
alarms. Probably we would cut. Right now, we wouldn’t need to do it. The
market is able to take what we are producing”.
Giving an indication
of what should be expected at the meeting, Daukoru added: “There are two
shades of opinion. One believes that current price levels are okay. The second
is that we should bring prices down. I belong to the more moderate camp”.
Nigeria would want the
OPEC reference basket to settle well above the current $22 to 28 pb target
band.
There is likely to be
a divergent of views over what price the OPEC should adopt as band, but Daukoru
expressed belief that the matter would be settled by the members.
“We will discuss
it but the evidence is not overwhelming, one way or the other. There will be a
lot of discussion but I don’t think we will take a decision. Tthe
equilibrium price level should be in the mid-$30s for the OPEC basket. $30
should be the floor”.
Over the last three
months, Nigeria has been pumping a maximum 2.5 mbpd, including natural gas
liquids. It eased production at some ageing wells in August to protect
facilities.
The 10 OPEC members
with quotas produced 27.9 mbpd in October, compared to the new ceiling of 27
mbpd which came into force on November 1.
The Revenue Mobilisation, Allocation and Fiscal Commission
(RMAFC) has suggested that the 2005 budget be based on a $30 pb price, which is
$7 above the $23 pb on which this year’s budget was predicated. Its optimism
is based on the current impressive prices, which still remained above $48 pb at
the weekend.
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