27 May 2017

Nigeria Secures Second Exclusion From Opec Output Freeze

Abuja — Nigeria again got members of the Organisation of Petroleum Exporting Countries (OPEC) and its other non-producers allies led by the Russian Federation, to exempt it from limiting the volume of oil it can produce from its oil fields within the extended production freeze agreement they reached at their second meeting in Austria, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has disclosed.

This is just as the Nigeria Extractive Industries Transparency Initiative (NEITI) applauded the passage of the Petroleum Industry Governance Bill (PIGB) by the Senate, and thus asked members of the House of Representatives to find similar courage employed by the senators, to accelerate the passage of its own version of the bill.

Kachikwu, stated that the country and Libya, were exempted from the output freeze despite speculations they would be made to participate in the extended agreement.

He however noted the country was not opposed to joining the agreement if its production levels rose to levels expected to make her participate.

A statement from the Director of Press in the ministry of petroleum resources, Mr. Idang Alibi, in Abuja explained that Kachikwu said "between the six to nine months' extended window, all things being equal, Nigeria should get to an optimal oil production figures that will allow her participate in any needed production cuts."

He added: "Nigeria is not averse to production cuts as every responsible nation needs to make sacrifices to help price stability on a global basis." Kachikwu explained in the statement that the Nigerian oil industry under his guidance was on course to overhauling its operations and ramping up crude oil production.

He said: "The second meeting of the OPEC and non-OPEC oil producers ended on Thursday with a resolution to extend the agreement reached at their first meeting in December 2016 to cut global crude oil production in order to rebalance the oil market.

"In this regards, the ministers of the two oil producers bloc agreed to extend the six months 1.8 million barrels per day (mbpd) production cut which took effect from January 1, 2017 by another nine months at the expiration of the current agreement period on June 30, 2017.

"Similarly, the decision of the meeting to exempt Nigeria and Libya from the freeze was taken despite earlier speculation that Nigeria was going to be made to participate in the production cut mostly on the back of reported improvements in her oil production since the first agreement came into effect. Indeed, a number of both OPEC and non-OPEC countries had expressed their interest to see that Nigeria was brought into the fold."

Meanwhile, NEITI has said it was excited with the bold step taken by the Senate to pass the PIGB, stating that the decision to consider the bill as a priority was not only legendary, but historic given the challenges it has passed through in the legislative process of getting it into law for about 17 years.

It called on the House of Representatives to find similar courage to give the bill an accelerated consideration on its merit in the overriding interest of Nigerians.

"We also note that the objective of a petroleum sector law remains to develop a dynamic governance framework that will re-position the petroleum industry to fully embrace competition, openness, accountability, professionalism as well as better profit returns on investments.

"NEITI also notes that the public outcry that greeted the failure of the last National Assembly to pass this important bill perhaps informed the current Senate's resolve to revive legislative interest on the bill resulting in the milestone achievement recorded at the moment.

"We are delighted that to avoid the controversies that killed the last PIB, the current Senate, carefully assembled experts who carefully broke the bill into various segments beginning with the governance aspect of the proposed law. The PIGB now passed by the Senate is a product of this creative initiative," said NEITI in a statement from its Director of Communications, Dr. Orji Ogbonanya Orji.

NEITI explained that it had in the past alerted Nigeria to the fact that the country had so far lost over $200 billion as a result of the absence of the PIB.

It equally explained that the absence of a clear governance framework for the country's oil sector had resulted in a cumulative loss of $10.4 billion; N378.7 billion; and N1.74 trillion in under-remittances; inefficiencies; and theft, as contained in its past audit reports.

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