Daily Independent (Lagos)
Bassey Udo And Adeola Yusuf
31 October 2008
Lagos — The Federal Government on Thursday announced a five percent cut from Nigeria's two million barrels per day average production capacity (about 100,000 barrels) in compliance with last week's directive by the Organisation of Petroleum Exporting Countries (OPEC).
At the end of its 150th extraordinary emergency meeting in Vienna, Austria last November 24, the oil producers' group resolved to cut a total of about 1.5 million barrels from its daily production output as a way of curtailing further slide in international crude oil prices and stabilizing the market.
The Nigerian National Petroleum Corporation (NNPC) in a statement by its Group General Manager, Group Public Affairs Division, Dr Levi Ajuonuma, said government also canceled oil lifting programmes for 12.6 oil cargoes in the country's November and December crude exportation schedule.
Making this known in press release signed by the the NNPC disclosed that these steps were taken in compliance with the last Friday's 1.5 million a barrel cut from the global oil supply by the Organization of Petroleum Exporting Countries (OPEC).
In line with OPEC output cut back schedule for each members, Nigeria was expected to trim about 113,000 barrels from its production capacity to meet the 1.5 million barrels per day total volume from the 12 member nations.
The Federal Government's decision comes ahead of the November 1 deadline when the OPEC's decision is expected to take effect.
Nigeria, a prominent member of the oil cartel was a party to the decision made at emergency meeting to "balance the over supply market."
Said Ajuonuma: "As a result of the production cut announced by the Organization of Petroleum Exporting Countries (OPEC), cargoes in November and December lifting programmes are hereby reduced by 5 per cent.
"In addition, five cargoes from the November lifting programme and 7.6 cargoes from the December lifting programme have been cancelled. Details of cancelled cargoes in both months will be advised to customers and operators in the affected terminals."
The 1.5 million barrel per day cutback reflected the deep concerns within OPEC that the bottom appears to be falling out of the oil market as the global economic crunch takes its toll on the fuel consumption capacities of industries in major oil consuming nations like the U.S. and others which depend on the market for oil supplies to fire their industrial establishments.
Since the decision, the impact has been gradual, as crude oil prices have failed to respond in a significant way in a manner envisaged by the oil producers group. Oil prices climbed above $69 a barrel on yesterday Light, sweet crude for December delivery up $1.58 to $69.08 a barrel in electronic trading on the New York Mercantile Exchange (NYME) after trading as high as $70.60.
Crude prices have now fallen 56 percent from the highs reached in July, and more than $41 per barrel in just the last month.
Mines Chakib Khelil, "...the financial crisis is already having a noticeable impact on the world economy, dampening the demand for energy, in general, and oil in particular", adding that the "slowdown in oil demand is serving to exacerbate the situation in a market which has been over-supplied with crude for some time..."
"Oil prices", he continued, "have witnessed a dramatic collapse - unprecedented in speed and magnitude -to levels which may put at jeopardy many existing oil projects and lead to the cancellation or delay of others, possibly resulting in a medium-term supply shortage."
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