Why OPEC Favours High Crude Prices
By Collins Edomaruse with agency report, 06.08.2008
Minister of State, Energy (Petrol), Mr. Odein Ajumogobia, yesterday said the rising crude prices was in consonance with the “huge” investments members of Organisation of Petroleum Exporting Countries (OPEC) were making in the industry to ensure new output capacity.
The minister told Dow Jones Newswires that the oil producing countries were aware of global concerns over the rising crude prices, but said: “The Organisation of Petroleum Exporting Countries is unlikely to pump more oil to ease market concerns about the health of global crude supplies.
“I really don't see what OPEC can do other than make a futile symbolic gesture without any real prospects of higher OPEC output at this time," Ajumogobia said yesterday.
He said OPEC was aware of market concerns about global oil supplies keeping up with demand in the future but that the 13-nation producer group was making big investments in new output capacity.
"We recognise that future supply concerns are an issue and OPEC is addressing that,” he said.
Ajumogobia said the new oil price high hit last Friday was driven by speculative trading and a weaker U.S. dollar after the European Central Bank indicated earlier this week that European interest rates may be headed higher in coming weeks to head off building inflationary pressures. U.S. benchmark crude prices closed up by a record $10.75 a barrel at $138.54 on the New York Mercantile Exchange and are now up about 44% so far this year.
Ajumogobia, however, said Nigeria, where militant attacks have caused major oil production shut-ins, in the past two years, was considering the possibility of reopening some oil fields in Ogoniland.
Oil production in Ogoniland pretty much ground to a halt back in the early 1990s after Royal Dutch Shell
was forced to leave the area amid festering disputes with the local population over issues like environmental pollution and following the execution of Ogoni rights activists and leader of Movement for the Survival of Ogoni People (MOSOP), Ken Saro-Wiwa, by the Abacha military government.
Ajumogobia also said talks about restarting some Ogoni oil fields, which are away from the main area of militant activity that's crippled Nigeria's oil production, were still at an "exploratory" stage.
How much Ogoni crude production could be restarted was also still being considered, he said.
At the time of Shell's departure from Ogoni in 1993, the company was producing around 28,000 barrels a day in the area, which represented about 3% of the company's total Nigerian production at that time.
President Umaru Yar’Adua had in South Africa on Wednesday announced that Shell’s oil fields in Ogoniland would be reallocated to new operators which will be acceptable to the local communities.
More than 600,000 barrels a day of Nigerian capacity is shut because of militant assaults on oil infrastructure. The country is currently pumping around 1.8-2.0 million barrels a day.
The news agency also reported that a senior Israeli official told an Israeli newspaper on Friday that an Israeli attack against Iran, OPEC's second-biggest producer after Saudi Arabia, was "unavoidable" if Tehran continued to push forward on its controversial nuclear programme.
Iran is producing around 4 million barrels a day, while Saudi Arabia is pumping around 9.3-9.4 million barrels a day.
Crude prices rocketed Friday by almost $11 barrel to a new record high of more than $138 a barrel on a weakening U.S. dollar and fresh geopolitical concerns that raised big questions about the potential for Middle East oil supplies being disrupted.
