OPEC Countries to Invest $160bn to Increase Oil Output
From Kunle Aderinokun in Abuja, 06.10.2008
Nigeria and the remaining 12 member countries of the Organisation of Petroleum Exporting Countries (OPEC) have concluded plans to commit more than $160 billion (about N19.20 trillion) into crude oil capacity expansion programmes, which are expected to yield additional 500 million barrels per day (bpd) of crude oil to world’s production by 2012.
Also, President Umaru Musa Yar’Adua yesterday bemoaned the level of poverty in Africa, describing it as unacceptable, calling on the leadership in the continent to work assiduously to halve poverty by 2015 with a view to assuaging the suffering of the people.
Addressing participants at a workshop on “Energy Poverty in Africa” yesterday in Abuja, OPEC Secretary General, Abdalla Salem El-Badri, explained that the expansion programme became necessary because of the rising crude oil prices.
The workshop was jointly organised by the Finance and Energy Ministries and the OPEC Fund for International Development (OFID).
Essentially, El-Badri pointed out that OPEC was making the moves to increase production of crude oil to mitigate the unfavourable effects of high oil prices on poorer nations of the world.
The spirited efforts by the OPEC member countries may not be unconnected with the serious threats rising oil prices and food crisis is posing to the achievement of the eight Millennium Development Goals (MDGs), including halving extreme poverty by 2015.
“Currently, oil is selling for more than $130 per barrel, bringing in its wake, calls on OPEC to increase supply. The existing volatile situation in the market is therefore, a clear indication that oil prices have been vulnerable to factors other than market fundamentals.
“The sharp increase in crude oil prices over the last 10 months has coincided with a continuing decline in the value of the US dollar, which has encouraged asset portfolio substitution as investors seek to hedge against inflation and the decline in the value of dollar by switching directly to commodities or indirectly via index trading.
“This has caused crude oil prices to become disconnected from the dynamics of supply and demand fundamentals and the heightened levels of speculation have been a principal driving force behind the volatility as oil, like other commodities, has been turned into a financial asset,” he said.
El-Badri, who was represented by Head of Public Relations and Information Department of OPEC Secretariat, Omar Farouk Ibrahim, said OPEC was disturbed by the spate of speculation, which “has created volatility in the oil market, and was worsening the plight of the poor as well as hampering sound investment planning for the future.”
Nevertheless, El-Badri said OPEC would continue to make provisions for poorer countries that do not produce oil, and lack the financial power to buy from the market.
He recalled that “the heads of state of member-countries had in 1975 in Algiers produced the OPEC Fund for International Development (OFID), which has been working to alleviate poverty in more than 120 poor countries across Africa, Asia, Europe and Latin America, through the provision of aids and grants.
“In addition to OFID, our member-countries also render assistance to poorer developing countries through various arrangements including bilateral and multilateral aid institutions,” he explained.
El-Badri disclosed that OPEC members had pledged $750 million for the funding of research relating to energy, the environment and climate change.
An estimated 2.5 billion people in developing countries, he said, rely on biomass for their cooking and heating needs, while about 1.6 billion live with no access to electricity, adding that over 130 million people in sub-Saharan Africa also rely on firewood, cow dung and crop residues for their cooking and heating needs.
“This has enormous health implications for the people and it gives them no escape route from the poverty cycle,” he said.
Yar’Adua posited that the continent must achieve higher levels of domestic and foreign direct investment and economic productivity for it to attain the MDGs by 2015.
He lamented that productivity and overall economic performance in sub-Saharan Africa were being hampered by the poor state of energy sector.
According to him, “as some of our development partners will attest, Africa is not exactly poor in energy resources. We are aware that Africa’s land mass of 30.3 million square kilometres is endowed with rich natural resources, including fossil and renewable energy sources.
“Nevertheless, most of these resources are yet to be exploited. There is need for further investigation which, we expect, is part of the charge of this workshop. Effort must be exerted to enable African countries to overcome the problem of access to energy, as a basis for creating sustainable development.”
Yar’Adua who was represented by Finance Minister, Dr. Shamsuddeen Usman, stated that apart from energy supply and energy sufficiency, African governments were also being challenged by some other difficulties.
For instance, he cited many African governments still struggling with infrastructure creation along with other human development issues.
According to him, African countries need financing for education, shelter, healthcare and private enterprises development to move their societies and economies forward.
“Even now, a major threat to stability in some of our countries is that of food crises, brought about by the rise in prices and shortages due to increased use of agric products for bio fuel,” he added.
