Mike Oduniyi and Onyebuchi Ezigbo with agency report
13 April 2006
Lagos/Abuja — Crude oil prices yesterday notched up to about $70 per barrel after news of renewed threat by Ijaw militants to attack oil companies and production facilities in the Niger Delta sent fresh fears of supply crunch to the international oil market.
Already, the continued loss of more than 550,000 barrels per day (bpd) of oil production by Nigeria, has split the Organisation of Petroleum Exporting Countries (OPEC), over how to make up for the losses.
Also, Nigeria will require about $1.5 billion (N192 billion) this year to meet up with gas supply to power stations, where electricity output has been crippled by the crisis in the Niger Delta.
The May delivery of the market benchmark crude, the Brent, was traded yesterday at a new all time high of $69.71 a barrel, up from $67 per barrel on Monday.
Traders said that the market had been keeping an eye on stock data from the US, where analysts have predicted 1.2-million barrels build in commercial crude stocks.
Crude prices they argued further, also found support from new threats from Niger Delta militants and simmering tension over Iran's development of nuclear technology.
On Tuesday, Niger Delta militants responsible for the roughly 25 percent cut in Nigeria's crude oil production said it would launch fresh attacks on oil companies operating in the region to demonstrate their opposition to the stakeholders' meeting convened last week by President Olusegun Obasanjo to resolve the crisis I n the region.
The Movement for the Emancipation of Niger Delta (MEND), said the attacks would commence April 25, this year in an apparent move to disrupt the work of the committee set up by the stakeholders' meeting.
Apart from the Nigerian oil supply fears, the international market has also been jolted after the International Energy Agency yesterday raised its estimate of the amount of oil OPEC needs to pump to balance supply and demand this year by 400,000 bpd to 29.4 million b/d as a result of upwards revisions to oil demand data from non-OECD countries.
In its latest monthly oil market report, the Paris-based advisor to major energy consumers made upwards revisions to estimated oil demand in non-OECD countries for 2004, 2005 and 2006. In outright terms, global demand is now expected to average 85.06 million b/d in 2006, 320,000 b/d more than previously predicted. Of this increase, some 250,000 b/d relates to the Middle East, the IEA said.
OPEC itself is divided over moves to cover the rising global oil demand. While some member countries are rooting for an increase in the group's production ceiling of 28 million bpd, the OPEC Secretariat has ruled out any of such decision.
Kuwait's oil minister, Sheikh Ahmed Fahed al-Sabah said that OPEC could decide to raise the group's official crude output ceiling to try to stabilize world oil markets as international crude prices push higher on concerns about Iranian and Nigerian supply.
But OPEC Acting Secretary General, Mr. Mohammed Barkindo told THISDAY that the group was not considering raising its output ceiling. "The issue of adjusting production ceiling does not arise. It is not even on the card," said Barkindo.
"It is not our policy to approach production levels from that angle. As far as OPEC Secretariat is concerned Nigeria and Iran have not been producing less than their officially assigned quota."
"Nigeria's current output loses have come from the onshore fields, which have been adequately compensated for by higher output levels from the offshore," said the OPEC scribe.
OPEC is next scheduled to meet June 1 in the Venezuelan capital Caracas. High prices prevented OPEC from even thinking about cutting production at meetings earlier this year, despite projections of a sharp fall in demand during the second quarter.
Meanwhile, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Engineer Funsho Kupolokun yesterday said the nation needs to spend about $1.5 billion in 2006 to meet up with gas supply to power stations.
Against the background of recent slide in power supply in the country which the Power Holding Company of Nigeria (PHCN) blamed on poor gas supply, Kupolokun said the amount will be used to fund the various gas transmission infrastructures in order to meet the demands of the electricity power projects.
The NNPC chief who noted that gas demand growth rate has surpassed previous estimates said significant additional funding will be needed in the years ahead to fund gas infrastructure upgrade and even build new gas plants to be at per with up-coming power projects.
Speaking at the graduation ceremony of the Course 036 of the NNPC Chief Officer's Management Training Programme in Abuja, Kupolokun said the crisis in the Niger Delta area has significantly affected the corporation's capacity to supply gas to PHCN's power facilities.
He said the persisting militants' action in the region has stalled efforts at repairing damaged pipeline network especially the one at Chanomi Creek which is responsible for pumping gas to most of the power plants.
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