The Guardian
Email YouTube Facebook Instagram Twitter WhatsApp

Kachikwu has eye on shale as OPEC readies cuts

Related

Video Not Found: FvZjN0NzE6SMzxITVS0UKFFDmqpIVj7DVideo no longer available
As OPEC prepares for talks on eliminating a global crude glut, Nigeria’s oil minister says he’s more concerned about the potential for U.S. shale suppliers to replace the lost barrels by ramping up their own output, quelling any price rally the producer club might achieve.

“The challenge is less with OPEC and more with the outer forces we don’t control,” Emmanuel Ibe Kachikwu, the country’s minister of state for petroleum, said Thursday in an interview in Tokyo. “The U.S. is beginning to ramp up volumes again.”

Nigeria is among nations at the sharp end of the global crude surplus. Prices are below its fiscal break even and surging U.S. shale production restricted its biggest export market to a fraction of what it used to be. The African country has also had to grapple with militant attacks on its oil infrastructure this year.

The Organization of Petroleum Exporting Countries meets Nov. 30 in Vienna to assign output quotas after agreeing on a framework deal in September.

Greater Worry
“My greater worry is less than OPEC’s ability to find unity in these issues, which I think we will, and more the fact of how much even a decision we make impacts the pricing issues,” Kachikwu said. Oil may rise only slightly above $50 a barrel if a consensus is reached, and could fall as low as $44 without a deal, he said. Benchmark Brent traded at $48.50 at 9:04 a.m. in London.

OPEC members have called for production cuts to boost prices that remain below half their level of mid-2014. They’ve been holding preliminary talks on how to share the burden of cuts to bring the group’s supply to as little as 32.5 million barrels a day.

Nigeria itself would be exempt from a deal since its production has suffered from a wave of militant attacks. The country aims to boost output to 2.2 million barrels a day by the end of the year from 1.9 million now, Kachikwu said.


In this article:
Ibe KachikwuOPECShale
Receive News Alerts on Whatsapp: +2348136370421

7 Comments
  • Noeltony

    The “chickens are coming home to roost” honorable minister. The sins and corrupt practices of our former leaders who had absolutely zero foresight in diversifying our economy and refusal to recognize that “alternative energy is not FLUKE is manifesting today. Lets see what happens ten years from now when it comes to crude oil production. The Indians and Chinese can buy crude oil in advance for heaven knows; Twenty years so that we share the money or better still concentrate it in one section of the country. Judgement is coming and all of us are in for horrible decisions of our present and past leaders. Trust me, their will be more shell oil from Canada than the US when the economic conditions are right.

    • William Norris

      It’s not just the leaders. The people are to blame….the people bear greater responsibility than government.

  • Augustine Egbo

    The economic policy of Nigeria, largely framed around crude oil export was flawed from the beginning. For the first time in Nigeria’s history you now have a minister of petroleum that has insight on what the future portends. Unfortunately, he came at a time that the wheels have fallen off the wagon. I will attempt to paint a few scenarios going forward:
    1. Within the next 30 years, crude oil, a fossil fuel, will diminish just as coal has. Dr. Kachikwu is right that OPEC no longer holds sway on global crude oil pricing determination as was the case decades ago. United States shale oil production combined with Canada’s tar sands can meet entire world crude oil demand if unshackled by environmental restrictions. Now they have a President elect that might just do that. So given this bleak prospect, what can Nigeria do with its proven reserve of crude oil to still remain relevant for at least another 40 years? My suggestion is divert available resources to building a few modern refineries (scrap all those antiquated structures) that would supply Jet fuels and ultra low sulfur diesel to be sold on global market for Airplanes and Trains. These are two major consumption opportunities where alternative fuel replacement may be more than 50 years out compared to other major utilization (cars, trucks, power generation, etc.) being phased out. So what would Nigeria gain by going that route? Well, for starters they will provide employment for the exploding youth population and add value to its crude oil while it last, getting more income by so doing.
    2. Build petrochemical plants that use crude feed stock to produce industrial raw materials. Nigeria currently spends hundreds of millions of dollars on importation of plastic packaging, fertilizers, fabrics, dyes, and much more. Again, what will Nigeria gain from this? As stated earlier, provide employment and earn huge foreign reserves by becoming a major exporter of petrochemicals and spurning off new industries in plastics.
    3. Divert resources to building the country’s natural gas industry. If am running the crude oil sector as my personal business, I will be spending my budget on transitioning away from crude oil. Check with IBM what happened to them when they failed to see the personal computer industry coming? They where blown away.
    All those countries that cannot see the world 50 years away will be asking themselves what happened when Solar, wind, and battery takes over completely. Tesla is building the the largest battery factor in the US and their vision is that within the next decade they would have advanced battery technology to the point where every car made in the world would have sufficient battery power to perform just are good as current fossil fuel operated cars. So batteries charged with solar and wind power would run cars and perhaps trucks.

    I would stop at this point for the sake of brevity.

    Augustine Egbo

    • William Norris

      When you recommend building all these things you should also tell us WHO will do it.

      Government? Federal or State?

      Private companies?

      Foreign investors?

      Other entities?

      Any thoughts or recommendations?

      • Augustine Egbo

        Finding world class companies to harness Nigeria’s crude oil resources would not be difficult to do given the right environment. Just this week the new president elect of the US called some mega companies and asked what would it for to stop shipping jobs out of the US? Details of the conversation was not revealed but most of companies announced new factories to be built in the US and some said they will bring back planned plant expansions. I suspect that the president elect must have made them offers they couldn’t refuse. For starters make lucrative offers to ExxonMobil, Shell, AGIP. It is better to have 10 percent of something than 100 percent of nothing. Nigeria spent hundreds of millions of dollars doing turn around maintenance on outdated refineries instead building new, advanced technology refining facilities. At a point in the life of any mechanical object it costs more to maintain that buying a new one.
        If the big players refuse to play use venture capital. Just make the right deal.
        But the main reason Nigeria/Nigerians object to such deals is that it provides no opportunity for graft.
        Another option is to go by way of modular refineries that some Nigerians can afford. As for technical manpower, trained and experienced Nigerians working in world class facilities in the US are many. Tap on them. My father once said “a hunter will use his female dogs if there no male dogs”
        Cheers
        Augustine Egbo, Chem. E

        • William Norris

          Actually the main reason Nigeria can’t do all those things is that the country has an economic structure based on government ownership of everything.

          The British – who own or are allied with the people who own Exxon, Shell etc created that structure because the Nigerian Government is just another corporation they own. Very little gets done because the TRIBES are engaged in a struggle to be the MANAGERS of that corporation called the Federal Government of Nigeria. Those tribes were forced into the same country PRECISELY to use divide & rule to keep them under control.

          To wit, Nigeria is a COLONY just like South Africa and most African countries are STILL COLONIES. That’s the biggest reason for all the dysfunction and destitution you see in Africa. Most Africans simply are too daft to grasp this simple truth.

          I don’t have time to detail all this but you can read my commentary if you care. Just an example, do you know that NOT ONE SINGLE NIGERIAN OWNS ANY LAND IN NIGERIA? That’s the law and very few know it. That’s African ignorance for you.

          http://nigeriavillagesquare.com/forum/threads/nigerias-crony-capitalism-how-ibb-and-rogue-dictators-shared-nigerias-oil-wells.72260/page-5

  • Engr Mudashir Olawale Sunmonu

    I don’t know the type of nation we are building and what will become the next generation, A nation having very bright and intelligent people yet could not annex this for creative thinking for national development. The greatest challenge facing the economy presently is the quantum of foreign exchange needed for importation of fuel into the country, and the thinking should have been how to quickly ramp up the refining of oil for self reliance and expand further for export. As an engineer I know this can be achieved within six months to one year. The first step is to quickly resolve Niger delta security problem and provide security to the crude pipelines for uninterrupted crude supply to the refineries, while doing this the refineries should be upgraded by outrightly replacing weak components and machines for new efficient one, and adding more distillation columps to expand production.if we are to borrow or invite Nigerian private investors to partner, the ultimate is to this quickly with abilities to also produce aviation fuel. The second phase is convert all refined petrol depots into modular refineries by converting the fuel pipelines into crude transportation and this is within my competence level and so for other many Nigeria engineers.