Nigeria loses ground in Opec in face of unrest

Oil output in Nigeria has plunged by a quarter since the start of 2006 in the face of political unrest in the Niger Delta, reducing the country’s influence in the Organisation of Petroleum Exporting Countries (Opec) and limiting the effectiveness of Opec itself.

Nigeria, Africa’s biggest producer, accounts for a daily output of 2,6-million barrels at peak production, but violence in the oil-producing south has reduced that figure by a quarter since January 2006.

More than 200 foreigners, mostly in the oil industry, have been kidnapped and later released by militants seeking a larger share of the region’s oil wealth.

“The most dangerous areas have been abandoned by oil company operators,” said Francis Perrin of the publication Arab Oil and Gas.

Despite the election of a new President, Umaru Yar’Adua, in April, “we don’t have the impression the government has the means to find a lasting solution”, Perrin said.

The International Energy Agency estimates that without the unrest, Nigerian daily outout would come to more than three million barrels.

But the agency has also noted that Nigeria’s less vulnerable offshore production is gaining momentum, currently amounting to 900 000 barrels a day but with the capacity to eventually add 500 000 barrels.

The government’s overall output target is four million barrels a day by 2010.

But at the moment, the paralysis afflicting oil operations in the Niger Delta is affecting the production capacity of Opec, in which Nigeria is now the sixth largest exporter. Under normal conditions it would be the third largest.

At a time when oil demand is soaring, Opec production is also hampered by instability in Iraq.

“If Iraq were capable of producing at its pre-war level and if there were a return to security in Nigeria, we would have an extra one million barrels a day on the market, which would ease pressure on prices,” said Terzian.

In Nigeria, recent attacks—gunmen killed one foreign oil worker and kidnapped two others in a raid on Thursday on a compound belonging to Italian oil company Saipem—have helped push oil prices above $80 a barrel.

Within Opec, Nigeria’s impact is waning. “It’s a country that for months has been unable to meet its [production] quota,” Perrin observed.

“What counts in Opec is to be able to vary production according to market conditions, especially upward production,” he added.

“By these standards, Nigeria has been on the sidelines for the past two years.
- Sapa-AFP

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