NAPIMS - opec

The house of Representative Committee on Petroleum Resources has suggested that Nigeria reconsider her continued membership of the Organization of Petroleum Exporting Countries (OPEC) if it must reap the full benefit of the current Production Sharing Contracts (PSC) deal with multinational oil companies.

Chairman of the committee Hon. Cairo Ojoughoh, said that in the alternative Nigeria should continue to remain in OPEC and terminate the use of PSC in executing joint venture oil deals. The chairman's call, which stemmed from the likelihood of Nigeria not earning revenue in the nearest future from oil produced in the numerous deep off-shore fields, came even as OPEC hinted at the weekend that it may shelve its quota system for oil production, which will allow members to produce at their capacity.

Ojougboh said there is gross exploitation of Nigeria's oil resources and revenue by multinational oil companies as a result of, �curiously, unfavourable� terms Nigeria had entered with them in the deep offshore PSC agreements. The chairman who was speaking to newsmen over the weekend in Abuja said that PSC agreement does not favour Nigeria in OPEC, because the production quota placed on its member countries, makes oil giants to keep milking Nigeria for free, long as the country meets its OPEC quota.

�The PSC law was made in 1993 and amended in 1998. It primarily allows Oil companies to produce and export oil from Nigeria's deep offshore field for at least five years without paying any form of revenue to government, until it recoups its exploration and development cost."

So far a total reserve of about nine billion barrels of crude oil has been explored under the PSC agreement. Nigeria's present crude reserves estimate is put at 35 billion barrels.

�Take the example of Angola, Gabon all in the Gulf of Guinea among other African Countries that are not members of OPEC�, he said, � they are free to produce and sell their oil as they want, and see how well they are doing today�, he said pointing out how Angola's oil production has increased by over 600% within a decade and is expected to jump from its present 1 million barrels per day to that of Nigeria's current OPEC quarter (2 million barrels per day) in three years time.

�We have a choice to make� he said, � if we are going to stick to this PSC arrangement, then we must leave OPEC and forget about the PSC� he said. �My committee is already working on the matter and, before the end of this month, or early next month we would table the matter before the House at plenary�, he said.

"My committe is already working on the matter and, before the end of this month, opr early next month we would table the matter before the house at plenary", he said.

He said that when the PSC was entered into, crude was as low as $9 dollars per barrel, with the projection that it will not exceed $20 dollars per barrel. Ojougboh however pointed out that, crude prices have climbed to a steady average $50 dollars, with no profit to Nigeria for the millions of barrels that has been produced and sold by the oil giants.

As concerns over rising crude oil prices continue to mount, the Organisation of petroleum Exporting Countries (OPEC) has hinted that it may drop the application of quota system, which will allow members to produce at their capacity.

Oil prices closed at the weekend at nearly $55 per barrel, with consumer nations looking up to OPEC to spin moves to cool the prices.

Already, the International Energy Agency (IEA), the Paris based energy advisor to the world's biggest economies, has projected that world oil demand would increase by 22 percent this year.

�OPEC will work for stabilizing prices either by maintaining the ceiling as it is now or allowing overproduction to continue like it did in 2004,� Sheikh Ahmad al-Fahd al-Sabah, said on Saturday.

The move if adopted will see Nigeria, for instance being able to push its production to around 2.5 million barrels per day (bpd), as against its official quota of 2.2 million bpd and the 2.24 million bpd produced in January.

Al-Sabah acknowledged that sky-high oil prices had already tempted some members to pump above quotas. A Reuter survey showed the 10 producers excluding Iraq together pumping 600,000 barrels per day (bpd) above the official ceiling last month.

�I think that now everybody is overproducing,� Sheikh Ahmed said. � Current prices make it lucrative for everybody to hike production without the need for an (official) decision.�

On Friday, the IEA said OPEC production rose by 390,000 bpd on the month to 29 million bpd, due to increases in output from Kuwait, Nigeria, Saudi Arabia and Iraq.

�Until now I don't think there is a shortage in the market, and I think OPEC, due to current prices, will continue with the same ceiling (at Isfahan),� Ahmed said.

OPEC members Iran, Qatar, Venezuela and Algeria have come out in favour of keeping output steady. OPEC said it had some 2 million bpd to spare.

Most OPEC members are already pumping at full tilt Saudi Arabia, the United Arab Emirates and Kuwait are the only member with significant spare capacity and will have to take responsibility for any further supply increase.

House Committee Seeks Nigeria's Withdrawal from OPEC