• Promises focus on domestic gas use
• OPEC maintains 30m bpd, says no quick fix for sliding oil price
BREAKING the glass ceiling and launching Nigeria into a prominent role in the global oil sector, the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, yesterday emerged as the president of the Organisation of Petroleum Exporting Countries (OPEC).
By her election in Vienna, Austria yesterday, Alison-Madueke became the first female to hold such a position in OPEC. Her tenure is to run from January 1 to December 31, 2015.
This comes as the oil league said it would not panic yet despite oil price shedding about $30 within the last five months. The group therefore, retained its 30 million barrels per day production mark.
The outgoing President of the OPEC conference, Omar El-Shakmak, said in a remark at the end of the parley yesterday in Vienna, Austria: “Recording its concerns over the rapid decline in oil prices in recent months, the conference concurred that stable oil prices – at a level which did not affect global economic growth but which, at the same time, allowed producers to receive a decent income and to invest to meet future demand – were vital to world economic wellbeing. Accordingly, in the interest of restoring market equilibrium, the conference decided to maintain the production level of 30.0 million barrels per day, as was agreed in December 2011. As always, in taking this decision, member countries confirmed their readiness to respond to developments which could have an adverse impact on the maintenance of an orderly and balanced oil market.”
OPEC also agreed to be vigilant given uncertainty and risks associated with future developments in the world economy and directed its secretariat to continue its close monitoring of developments in supply and demand, as well as non-fundamental factors such as speculative activity, keeping members countries fully briefed on developments.
The conference also extended the tenure of its Secretary General, Abdalla El-Badri, for a further six months, which will terminate on December 31, 2015.
The group also urged cautious optimism on a possible quick-fix approach to halting the sliding oil prices in the international market.
According to El-Shakmak, the sliding prices are a sign that the oil market is currently searching for stability and balance. To this end, he hinted that OPEC would always focus deliberations on contributing towards stability.
His words: “We also recognise that dialogue has always been instrumental for the achievement of such goals. That is why OPEC is committed to engaging further in international dialogue and cooperation efforts – through participation in meetings, symposia and workshops. These include dialogue with the G20, the EU and Russia, as well as working programmes with the International Energy forum, the International Energy Agency and other international institutions.”
The OPEC chief declared that the recent free fall of oil prices is not exclusively tied to oil market fundamentals but what he termed ‘ample supply’, moderate demand, a stronger United States dollar and uncertainties about global economic growth were the key factors that had been dictating the disturbing trend.
He warned that if the trend continued, the long-term sustainability of capacity expansion plans and investment projects might be put at risk.
Alison-Madueke said the U.S. shale oil had a lot of impacts on all major oil-producing economies and a major game-changer for all of countries across the globe.
According to the minister, to re-direct and re-prioritise the Nigeria economy, the country urgently needs to look at setting up an enabling environment to ensure that it has access to other markets other than the major market of North America which has now been shut with the advent of the U.S. shale oil and gas.
To do this, she stressed the need to urgently pass the Petroleum Industry Bill (PIB) in order to spur a competitive operating environment.
She said: “The current fall is being sustained. We hope that the balances level out very quickly but while this happens, we really have to ensure that we are competitive, particularly in terms of end user markets.”
According to her, Nigeria at this point is left with no choice other than to embark on an aggressive development and domestic utilisation of its gas.
“Nigeria has no recourse at this point in time other than to fully develop our gas infrastructure for domestic use and I think that we are pushing ahead with that in all ramifications,” she explained.
She noted that the $70 price level of oil was a challenge for most oil-producing countries not just OPEC, saying, “I think all of us are in this together. If non-OPEC countries don’t cooperate with us, there is little that can be done.”
Reacting to the election of Alison-Madueke as the president of the organisation, the Group Coordinator, Corporate, Planning and Strategy of the NNPC, Dr. Tim Okon, described it as well-deserved and a recognition of her contribution to OPEC since her assumption as the minister.
Though he agreed that the market was over-supplied, Okon declared that the time to press the panic button had not come.
His explanation: “Nigeria is a price taker and not a price setter by any mean. So, the market would do what it does. We need to do what others are doing which is strategic marketing of our crude and through that we can maintain value as much as possible. I think it is a general consensus that the market is over-supplied but from the analysis that I have seen, it is believed that that over-supply will be significantly reduced next year as supply will balance supply later next year.
“On pressing the panic button, I think the first quarter of next year will be good to do a re-appraisal of the situation. With growing economy globally, I think demand will pick up next year. Overall, I don’t think the over-supply is too much of a problem.”
The Group Managing Director of the NNPC, Dr. Joseph Dawha, lauded OPEC for electing the first female president who is a Nigerian.
“The election of the minister is an exciting development to Nigeria. We know that she is capable of handling the demands of the office. She will bring her wealth of experience to bear in her new position.”