Abuja — President Clinton broached the subject of oil prices in his talks with President Obasanjo this weekend. Prices per barrel have topped $30 and the US would like to see the price at around $20.
Nigeria's crude oil exports, nearly half of which go to the United States, account for about 95 per cent of Nigeria's foreign exchange earnings. Oil from Nigeria accounts for about a fifth of America's total oil imports, making oil a key element of the relationship between the two countries.
President Clinton admitted that Nigeria does not have the power to change the price of oil, "because they're pretty well producing at full capacity already." But Clinton believes the answer to the rising price of oil is increased production and he "asked the president (Obasanjo) to do whatever he could to encourage others (in OPEC) to increase production enough to have the impact that OPEC voted to have, at its last meeting," Clinton told journalists.
Low oil prices - which dipped to $9 per barrel early last year - hurt Nigeria's foreign exchange earnings, and fluctuations in prices make government budgeting difficult.
The oil price has inched its way up since the second half of last year, after Obasanjo took office as a civilian president in May of that year. The new prices have led to what has been regarded in Nigeria as "a wind fall" as government based this year's budget estimates at a price of about $18 per barrel.
Despite this, President Obasanjo said in response to President Clinton's remarks that "I have always maintained that excessively high oil price is neither good for oil producers nor for oil the consumers... because you need a certain amount of stability." He said that stability would be achieved when OPEC has a mechanism that automatically adjusts output when the price falls outside a certain range.
Obasanjo's preference is clear: predictable, stable oil prices are better than temporarily high prices that could plummet overnight, throwing state revenues budgets out of balance.
He said OPEC will at its meeting coming up in Caracas, Venezuela, next month, look into means of bringing stability in the oil market. "It is in the interest of all concerned," he said.
The Nigerian government has set a target to increase output to 3 million barrels per day by year 2003, up from about 2.2 million barrels per day. The country will surely need OPEC's support for such a production level.
