Stakeholders in Nigeria’s oil and gas sector have queried the relevance of Nigeria’s membership of the Organisation of Oil Exporting Countries (OPEC) and urged President Goodluck Jonathan to withdraw the country from the cartel.
These stakeholders gathered at the weekend in Lagos at a symposium organised in honour of a former Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Ayodele Marinho, who celebrated his 80th birthday.
They argued that OPEC as presently constituted serves only the interest of Saudi Arabia and its Gulf allies, which have contributed in the plummeting prices of crude oil because of a selfish desire to maintain their global market share.
According to them, Saudi Arabia and its allies are only concerned about competition with the United States’ Shale gas and less concerned about the plight of the poorer non-Arab member-countries, which bear the brunt of the sharp drop in oil prices.
In his lead presentation, the Chief Speaker at the event and a former Minister of Petroleum Resources, Mr. Odein Ajumogobia queried the relevance of Nigeria’s membership of OPEC in face of the current economic challenges facing the country.
He said in the past 57 years of crude oil exports by Nigeria, the country had always been exposed to the risk associated with the rapid, unpredictable and substantial changes in oil price.
“There are no mitigation measures other than the nation’s membership of OPEC, which have been in place despite the country’s mono economy for most of that period and with the potentially calamitous consequences of for our national budget ,mitigated only by reduced expenditure, debt or both,” he said.
“It is instructive that OPEC did not intervene in November 2014, as it had done in 2008, 1998 and on numerous prior occasions, to stem the slide of the price, by balancing the supply equation, even in the face of evident oversupply stemming from five million additional barrels from the United States Shale oil,” he added.
“At the heart of this matter on this occasion seems to be the desire of individual countries in OPEC, principally Saudi Arabia, and Arab States within OPEC- all with the exception of Libya with significantly increased production capacity- Iran, Iraq, Qatar, and United Arab Emirates (UAE), to protect and maintain their market share through the organisation, even if they have to, as they are indeed doing, individually selling their oil at discounted prices,” he explained.
Also speaking, a former Group Executive Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Ibrahim Waziri also queried the relevance of OPEC to Nigeria in the face of the current realities in the international oil market.
He argued that the current global energy dynamics has shown that Nigeria is inconsequential in the OPEC setting, stressing that the country is a member of the cartel purely based on ego trip.
Waziri called on the federal government to limit her involvement in the oil and gas industry to collection of taxes, royalties and regulation of activities in the industry, pointing out that the management and operation of the NNPC should not be left in the hands of the government.
However, the position of a former Group Managing Director of NNPC, Mr. Funsho Kupolokun, differed from the positions of the other stakeholders at the event.
In his remark, Kupolokun cautioned against withdrawal of Nigeria’s membership of OPEC, stressing that such step would make Saudi Arabia to flood the market with oil.
According to him, the glut that will be created by such action will force a drop in oil price to an all-time low of $9 per barrel.