Chika Amanze-Nwachuku and Patrick Ugeh with agency report
11 September 2009
Lagos — The Organisation of Petroleum Exporting Countries (OPEC) has agreed to maintain output quotas at 24.845 million barrels a day on hopes that a recovery in the world economy will keep oil prices high.
Oil rallied by more than $1 to $72.44 a barrel yesterday in the New York Mercantile Exchange, lifted by a soft dollar, gains in equities markets and soothing words from the oil producers' organisation.
Meanwhile, practical steps towards remedying the chaotic accounting system in Nigeria's oil industry have begun with a specialised firm in hydrocarbon measurement, Telemetry Nigeria Limited (TNL) appointed by Nigeria Extractive Industries Transparency Initiative (NEITI) swinging into action.
At OPEC's 154th meeting, which ended in Vienna, Austria, yesterday morning, the group resolved that there was no need to change production in view of current price rally and instead called for stricter compliance with existing curbs.
Oil prices touched an all-time high of $147.27 a barrel on July 11, 2008, but fell to $32.40 in December as the world grappled with recessionary pressures, which eroded global oil demand.
To help boost prices, OPEC, supplier of about 40 per cent of global crude oil, agreed last year that members with quotas would cut output by a combined 4.2 million barrels a day to 24.845 million barrels per day. Yesterday's meeting was the third time this year the group had met without changing output.
The 11 members bound by quotas pumped 26.055 million barrels a day in August, according to estimates in a Bloomberg survey, which indicates quota compliance of about 71 per cent.
OPEC Secretary-General, Abdalla El Badri, who briefed the press after the closed-door meeting, said there are positive signs that demand for oil would pick up in 2010. He urged that member countries to adhere to their production quotas.
OPEC said: "The Conference reviewed current oil market conditions and future prospects and observed that, whilst there are signs that economic recovery is underway, there remains great concern about the magnitude and pace of this recovery, especially in the major industrialised nations of the OECD. There has been some easing of the overhang in crude oil stocks but market fundamentals remain weak, refinery utilisation rates are low and product inventories have risen considerably.
"Accordingly, since the market remains over-supplied and given the downside risks associated with the extremely fragile recovery, the conference once again agreed to leave current production levels unchanged for the time being. In doing so, the conference reiterated its determination to ensure sound supply fundamentals and an adequate level of spare capacity for the benefit of the world at large. Similarly, the conference recorded the readiness of member countries to rapidly respond to any developments which might jeopardize oil market stability and their interests."
There had been expectations that OPEC would keep output unchanged in view of the current price rally and hopes of economic recovery.
Oil prices on Tuesday posted their biggest gain since the end of July, rising above $70 a barrel. The recent price rally above $72 a barrel was sequel to a falling US dollar, which pushed investors to commodities such as oil and gold.
Crude oil advanced for a fourth day with contract for October delivery climbing as much as $1.13, or 1.6 per cent, to $72.44 a barrel on the New York Mercantile Exchange yesterday.
OPEC will meet next in Luanda, Angola, on December 22, and again in Vienna on March 17 next year.
In Abuja, hydrocarbon measurement consultants, Telemetry Nigeria Limited, swung into action on its contract, financed by the World Bank, by consulting with stakeholders on Wednesday.
Speaking with newsmen later in the day, Mr. Yabagi Sani, the chief executive officer of the company, explained that NEITI engaged TNL to carry out detailed oil and gas metering studies to outline innovations and industry best practices in oil field measurements.
It would then identify gaps between local practices and global best practices, he said, with the aim of ensuring due process and transparency in the payments made by all extractive industry companies to the Federal government and statutory recipients.
According to Sani, other aims of the study are to monitor and ensure accountability in the revenue recipients of the Federal Government from extractive industry companies, as well as eliminate all forms of corrupt practices in the determination, payments, recipient and posting of revenues accruing to the Federal Government from extractive industry companies.
NEITI recently published its audit report for 2005, after that for 1999-2004, and commissioned the one for the remaining period till date.
Sani said the ongoing project being handled by his company, which is starting from where the NEITI technical audits ended, would entail a review of all the regulatory guidelines dealing with upstream and downstream measurements and product handling. He said they include DPR's "Environmental Guidelines and standards for the Petroleum Industry in Nigeria", and "Guidelines and Procedure Guides for Product Importation, Terminal Operations, Depots and Jetties".
Others are:
Another key function of the exercise is to review findings with the Department of Petroleum Resources, Pipelines and Products Marketing Company, PPMC and NEITI's Working Group on Metering before issuing a final study report.
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