Nigeria threatens to halt production cuts
Posted:01 December 2008
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In what seems a direct shot across the bows of Opec, Nigeria last week threatened that it would stop further cut in its crude oil production if member countries of the cartel failed to obey its earlier directives to do so.
The directive, in which Opec demanded that Nigeria cut its oil production by 113 thousand barrels per day to peg its production to 2.05 million bpd, was part of a master plan to prevent crude oil from any further turmoil in the ongoing global financial crisis.
Nigeria’s Minister of State foe Energy, Odein Ajumogobia, said that until other member countries fell in line with the directive, Nigeria would ignore any calls to stop further crude production cuts.
"Our position is that we want to ensure that everybody has complied with the previous cut. We have complied and we were asked to cut 113,000 bpd and we have done that," he said.
"At the last meeting when there was a cut we found out that a lot of countries did not comply, so before we look at any further cut, we first want to be sure that everybody has complied," Ajumogobia said.
We are producing what we agreed to produce which is 2.05 million bpd even though we have a capacity for a significantly higher figure than that but we have complied with the cut strictly," he added.
Ajumogobia said the reluctance of some member countries to obey the Opec directive was not an indication of a divided house.
"I think that when you have a group and have diverse interests within the group, sometimes it is not, and that is why we have been very successful notwithstanding the diversity of interests, we are able to build consensus," he said.
Even still, the Minister said that Nigeria would continue in its endeavour to work with the cartel towards shared goals within the organisation, although he also admitted that "If we cut, it will affect the budget. It will affect the total revenue.”
“The revenue is based on the benchmark plus volume, so if it comes to volume you may just have to adjust the budget again but I don't think we need to do that because we can always mitigate it based on the fact that we have significant excess from the high price and we can probably mitigate some of that loss," he said.
"There are two issues there - price and volume, and for a country like Nigeria that depends on the commodity, we depend on both," he added.
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