Budget: Nigeria may defy OPEC quota

The Federal Government warned on Wednesday that the 2009 budget would be endangered if it had to further cut oil production levels in line with signals from the Organisation of Petroleum Exporting Countries.

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Mr. Odein Ajumogobia, Minister of State for Energy (Petroleum)

It said that strict adherence to the quota was made more difficult by the apparent unwillingness of some OPEC member countries to respect the earlier directive on production cut.

The Minister of State for Energy, Mr. Odein Ajumogobia, disclosed this in Abuja shortly after the Federal Executive Council meeting.

In line with OPEC directives, Nigeria had cut its daily crude oil production by 113,000 barrels per day, pegging its daily production at 2.05million bpd, following the crash in global oil prices.


President Umaru Yar’Adua was to present the 2009 budget to a joint session of the National Assembly on Thursday (today), but indications emerged late on Wednesday that he would not appear as scheduled because of another important national assignment.

The Chairman, Senate Committee on Information and Media, Senator Ayogu Eze, had on Tuesday, said, “The President will likely come and present the 2009 budget on Thursday.”

He said the consultations between the National Assembly and the executive on budget were going on smoothly and that barring any hitches, the budget would be given accelerated consideration and easy passage.

Stressing government’s concern on the quota issue, Ajumogobia said, “If we cut (production), it will affect the budget. It will affect the total revenue.

“The revenue is based on the benchmark plus volume, so if it comes to volume, you may just have to adjust the budget again but I don’t think we need to do that because we can always mitigate it based on the fact that we have significant excess from the high price and we can probably mitigate some of that loss.

“There are two issues there, price and volume, and for a country like Nigeria that depends on the commodity, we depend on both. For that reason, naturally that is the thinking of everybody, nobody is anxious to cut.”

According to the minister, Nigeria’s position was that OPEC should ensure that all members complied with the quota.

He said, ”We have complied and we were asked to cut 113,000 bpd and we have cut 113,000 bpd.

“At the last meeting, when there was a cut, we found out that a lot of countries did not comply, so before we look at any further cut, we first want to be sure that everybody has complied.”

Known quota busters include Saudi Arabia and Kuwait.

According to the minister, “We are producing what we agreed to produce, which is 2.05million bpd, even though we have a capacity of producing significantly higher than that, but we have complied with the cut strictly.”

On whether spurning of OPEC’s directive was not a sign that the global oil cartel was a divided house, the minister said whatever problems the organisation might currently be having was as a result of the diverse interest of member states.

“I think when you have a group and have diverse interests within the group, sometimes it is not a problem and that is why we have been very successful notwithstanding the diversity of interests, we are able to build consensus,” he explained.

However, he assured that Nigeria would continue to work with other OPEC member countries for the unity and common goals of the organisation.

He said, “ Nigeria will not break ranks with the consensus but as I said, we want to make sure that there has been compliance with the previous directive from OPEC.”