Ex­perts hope­ful of waiver ex­ten­sion for Nige­ria as OPEC de­cides oil out­look

.•An­a­lysts worry over loom­ing hos­til­ity in N’delta

The Guardian (Nigeria) - - BUSINESS - From Kings­ley Jeremiah, Abuja

As the Or­gan­i­sa­tion of the Pe­tro­leum Ex­port­ing Coun­tries (OPEC), and other non-mem­bers meet to­day, to de­cide on key poli­cies, oil and gas an­a­lysts in Nige­ria are op­ti­mistic that the coun­try will get an ex­ten­sion of the waiver it is en­joy­ing from cur­rent sup­ply cuts in the mar­ket.

But any neg­a­tive out­come from the meet­ing and re­sump­tion of hos­til­i­ties in the Niger Delta as be­ing threat­ened, could spell doom for Nige­ria, and ham­per im­ple­men­ta­tion of the 2018 bud­get, an­a­lysts told The­guardian yes­ter­day. Nige­ria has been en­joy­ing waiver from OPEC’S sup­ply cut, to curb free fall of oil prices but may come off that re­stric­tion soon, de­pend­ing on OPEC’S de­ci­sion to­day. The meet­ing, which is ex­pected to put Nige­ria in the eye of the storm is pre­dicted will be tough, as OPEC and NON-OPEC mem­bers, es­pe­cially Rus­sia, may opt out of the in­ter­ven- tion to sta­bilise oil prices through sup­ply cuts.

“Rus­sia seems to have achieved what they wanted and there seems not be need for the sup­ply cuts. Saudi Ara­bia wants mar­ket to be sta­ble but if the sup­ply cut is dis­con­tin­ued then mar­ket sta­bil­ity be­comes a prob­lem and ev­ery­body has to push for mar­ket share,” Head, En­ergy Re­search, Ecobank Lim­ited, Do­lapo Oni, said. Not­ing that OPEC no longer en­joyed the unity it once had, es­pe­cially from non-mem­bers, Oni was op­ti­mistic that Nige­ria would be granted ex­ten­sion of the waiver if OPEC adopts the op­tion of ex­tend­ing cur­rent sup­ply cut till end of 2018.

“Nige­ria and Libya do not want to be men­tioned at the meet­ing. They don’t want the is­sue of ex­emp­tion men­tioned. But if Rus­sia is blan­keted, Nige­ria and Libya may have to join the cut.

“If pro­duc­tion stays at 2.1 mil­lion per bar­rel daily and we have to cut about 100 bbl, it is still okay for us as much as oil re­mains at above $60/bar­rel (bbl). But if OPEC takes the Rus­sian op­tion, and sus­pends the cut and ev­ery coun­try in­clud­ing U.S. Shale starts pro­duc­tion, then oil prices may re­turn to around $40/bbl. This will make the bud­get im­ple­men­ta­tion dif­fi­cult for Nige­ria,” Oni told The­guardian.

An­a­lysts have also raised con­cern that the coun­try, which re­cently ex­ited re­ces­sion fol­low­ing grad­ual sta­bil­ity of oil prices, may have more to worry about over loom­ing hos­til­ity by mil­i­tants in the oil pro­duc­ing Niger Delta.

Although ex­perts fore­cast that OPEC mem­bers would sup­port the ex­ten­sion of the dec­la­ra­tion on pro­duc­tion cut till the end of 2018, on Tues­day, United Arab Emi­rates En­ergy Min­is­ter, Suhail bin Mo­hammed al-Mazroui, be­fore leav­ing for OPEC meet­ing in Vi­enna, Aus­tria, said: “It will not be an easy meet­ing, and we al­ways look at var­i­ous sce­nar­ios.” The Chair­man/chief Ex­ec­u­tive Of­fi­cer, In­ter­na­tional En­ergy Ser­vices Lim­ited, Dr. Di­ran Faw­ibe, also hope­ful that Nige­ria would get ex­emp­tion ex­ten­sion by OPEC, as the coun­try’s econ­omy is yet fully back on track.

To him, Nige­ria can win ar­gu­ment to cut back pro­duc­tion; oth­er­wise it could be forced to leave OPEC, be­cause any at­tempt to force cut down on pro­duc­tion will be against its na­tional in­ter­est. Faw­ibe, not­ing that although geo-po­lit­i­cal forces have helped to sta­bilise oil prices, is how­ever not op­ti­mistic that price could rise to $70 next year.

“It is too early to spec­u­late that oil prices will get to $70/bbl. We should not be overly op­ti­mistic about high prices.

But we are mov­ing into win-

ter when there will be de­mand for oil,” he said. OPEC mem­bers and 10 other oil pro­duc­ing coun­tries in­clud­ing Rus­sia, ear­lier this year agreed to cut oil out­put by 1.8 mil­lion bar­rels per day un­til March 2018, the sit­u­a­tion helped in sta­bil­is­ing the oil mar­ket, push­ing price to as high as above $60. Although OPEC Sec­re­tary­Gen­eral, Sanusi Barkindo, at the sec­ond Tech­ni­cal Meet­ing of OPEC and nonOPEC Pro­duc­ing Coun­tries, on Mon­day, in Vi­enna, also hoped for fu­ture dec­la­ra­tion to curb oil out­put, as av­er­age con­form­ity to the sup­ply ad­just­ments achieved 100 per cent suc­cess.

Any de­ci­sion to the con­trary would put Nige­ria in a pre­car­i­ous sit­u­a­tion, es­pe­cially if mil­i­tants in the oil-rich Niger Delta make good their threats to opt out of a ceasefire agree­ment reached with the Fed­eral Gov­ern­ment.

The Chair­man, Tri­con­ti­nen­tal Group, who is also Na­tional Pres­i­dent, Nige­rian-amer­i­can Cham­ber of Com­merce (NACC), Olabin­tan Fa­mu­timi, in­sisted that Nige­ria has a lot to worry about.

“The fact that we were given ex­cep­tion was based on our dire sit­u­a­tion. The is­sue is fur­ther com­pli­cated be­cause of the bit­ter con­test for in­flu­ence be­tween Saudi Ara­bia and Iran. Each of them will try to sway Nige­ria’s sup­port. If we don’t man­age it well, it will spell doom for the coun­try that has a very del­i­cate econ­omy and a mono-prod­uct source of for­eign ex­change,” Fa­mu­timi told The­guardian.

Like Faw­ibe, he also dis- missed the pos­si­bil­ity of oil price mov­ing up to $70/bbl in 2018. Ac­cord­ing to him, if prices rise so high, the U.S. shale pro­ducer will raise their pro­duc­tion since the only fac­tor lim­it­ing them now is their cost of pro­duc­tion per bar­rel.

The Chief Ex­ec­u­tive Of­fi­cer, Bil­view En­ergy, who dou­bles as Pres­i­dent, Coali­tion of South South Cham­bers of Com­merce, In­dus­try, Mines and Agri­cul­ture, Billy Harry, wor­ried that the 2018 bud­get may be jeop­ar­dised on back­drop of neg­a­tive agree­ment by OPEC as well as im­mi­nent hos­til­ity by mil­i­tants.

Ex­ec­u­tive Sec­re­tary/ceo, NEPAD Business Group Nige­ria (NBGN) Do­sumu Olu­wole (right); Chair­man Ur­ban Shel­ter Nig. Ltd, Mal­lam Ibrahim Aliyu; Chair­man, NBGN Dr. Mrs. Nike Akande; Honor­able Min­is­ter of Agri­cul­ture and Ru­ral De­vel­op­ment, Chief Audu Og­beh;...

As­sis­tant Direc­tor at the Na­tional Assem­bly, Ayoh Ogon(left); Direc­tor of Op­er­a­tions, Rack Cen­tre, Ezekiel Eg­boye; Vice Chair­man, ICT & Cy­ber Crime Com­mit­tee, The Se­nate, Foster Ogola and Business De­vel­op­ment Direc­tor, Rack Cen­tre, Fred­er­ick Udoaka...

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