As OPEC President, Kachikwu targets removal of 1.5mbpd excess crude from market

02 December 2015, Lagos –  Minister of State for Petroleum and Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu has said that as President of the Organisation of Petroleum Exporting Countries (OPEC), his target would be to achieve the removal of 1.5 million barrels per day (mbpd) excess crude oil in the international market.

*Dr. Emmanuel Ibe Kachikwu.

*Dr. Emmanuel Ibe Kachikwu.

Kachikwu will lead the Nigerian delegation to Friday’s OPEC meeting in Vienna, Austria, where he will preside as president of the organisation.¨

Speaking on Tuesday in Lagos after monitoring the sale, loading and distribution of petrol in some private depots and filling stations, Kachikwu also stated that he would work to delay Iran’s flooding of the market with an extra 1.5mbpd, as part of a collaborative effort to stabilise the price of oil.

He also said that the federal government will in January 2016 work out the modalities for the privatisation of the management of NNPC’s pipelines to curb perennial fuel shortages arising from the inability to pump products directly through the pipelines on account of vandalism.

The minister, who visited NIPCO, Folawiyo Oil and Gas, Capital Oil and MRS depots, as well as Forte Oil, Oando and Mobil filling stations, assured Nigerians on the availability of petrol during the Yuletide season, adding that the corporation was working on a regional intervention mechanism with specific marketers to address the shortfalls in supply in certain geopolitical regions.

Kachikwu noted that Friday’s OPEC meeting will be a trying meeting but added that with the success of the Nigerian delegation at the recent Gas Exporting Countries Forum (GECF), he was optimistic that the meeting would be a success.

“I think the key thing will be obviously crude oil price. There is a lot of sensitivity on that – $42 currently and with potential to go down if Iran throws their barrels into the field – an estimated 1.5mbpd by next year.

“My first target as I meet with ministers one-on-one is to try to delay Iran’s flooding of the market to the last quarter of next year. I will be talking with Iran’s oil minister on that so that we can stabilise the price,” he said.

Kachikwu also hinted that he would try to mobilise other members of the cartel to get Saudi Arabia to join in issuing a statement that the organisation would take market issues very serious.
According to him, even if OPEC does nothing other than issuing the statement, it will send the right signal to the oil market.

“Maybe, hopefully, by the first or second quarter of next year, we will begin to see how that statement can now embolden us to go and begin to address removing the 1.5mbpd production that is lying in the market internationally. It is going to be a trying meeting,” Kachikwu admitted.¨

Kachikwu noted that the fuel shortages in the country were caused by the refusal of major marketers and some independents to import products product due to outstanding subsidy claims.

“One of the key problems that we all know is that a lot of those who bring in products have not been bringing products – the majors and a lot of independent marketers are not bringing products largely because of the fact that subsidy money has not been paid.

“So in an environment where NNPC usually will import 40-50 per cent of the country’s needs, it is actually now providing the resource for 100 per cent of the needs, there is no magic about why you are having this gap,” the minister explained.

Kachikwu however assured that President Muhammadu Buhari is working with the National Assembly to ensure that the outstanding claims are paid.
He also identified hoarding and cheating by marketers as a major challenge and wondered why some Nigerians would deliberately punish their fellow citizens because they wanted to make extra money.
To curb profiteering by marketers, the minister insisted that his directive to the Department of Petroleum Resources (DPR) to give out products hoarded in any filling station for free to the members of the public, was effective despite the criticism.

“I hear people criticise when I say sell the products for free if people are cheating but that still remains the rule because if you are going to punish people, you have to take responsibility for the things you are going to cause,” he added.

Kachikwu also admitted that the refineries were also not working but added that the Port Harcourt and Kaduna refineries will soon resume operations to help address the supply gap.

“In January 2016, we are going to be looking seriously at refinery models. How do we deal with it? How do we bring people to assist us on a technical and investment basis to get these refineries in a much more consistent and permanent basis?

“Of course, from January, we will begin the new direct sales-direct purchase programme. So we will have a lot more of efficiency in what we are doing,” he added.

According to him, the Pipelines Products and Marketing Company (PPMC), a subsidiary of NNPC, which is supposed to be the supplier of last resort, now accounts for 100 per cent of supply, adding that the poor state of the pipelines was hampering PPMC’s efforts to ensure availability of products.

“Ultimately, we are going to look at the pipelines early in January to see how we can privatise the management of these pipelines and get them out of these perennial problems that they have, because if we are pumping directly through these pipelines, some of these problems will be reduced.¨

“But like I said, all these problems added is not as big as the problem of the fact that the major participants are not bringing in products. That is where the main problem lies,” Kachikwu said.

NNPC has over 5,000 kilometres of pipelines linking 22 depots across the country but vandalism of the pipelines has made it impossible for petroleum products to be pumped through them.

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