18 January 2016, Abu Dhabi — CNN’s John Defterios spoke with Nigeria’s Minister of State for Petroleum, Emmanuel Ibe Kachikwu, on a number of issues and the minister share his view on oil prices, the effect of oil prices on OPEC member nations and Saudi’s refusal to cut production.
What are your thoughts on the continued slide in oil prices?
I don’t expect to see the price of Oil falling to $20 dollars per barrel. I expect it to hover around $30 or thereabouts for about a month or two and then it should begin to climb. I am optimistic that the prices will close at an average of $40-$50 dollars per barrel by the end of 2016 but Q1 is bound to be tough. The current price is not really a surprise although the prices fell more rapidly than we expected. Our initial projections were not less than $35 per barrel.
With the presidency of OPEC in mind here, you had a divided meeting in December that almost resulted in a mutiny. What happens at this stage and what triggers an emergency meeting? Could we see one at the end of February as many are suggesting?
I expect to see one. There’s a lot of energy around one, but meetings cannot be meaningful unless all parties can agree on some common positions. Ultimately OPEC is a union of the interests of its members and if the majority of your members are taking a bashing in the oil market and their economies are getting shattered, clearly something needs to give. I believe that emotion, much more than the polemics of pricing, will ultimately drive an emergency meeting.
Does this change the Saudi Arabian position, with the support of three other Arabian Gulf producers? Has it gone too far, the Saudi strategy to fight for market share?
I think that policy is going too far. I think it is time to take a step back from all the politics, review the situation and find a way to balance the need to protect market share with the more pressing need to ensure the survival of the business itself and the survival of countries involved in Oil exporting. I think the majority of OPEC member nations understand that there is a need to seek the middle ground, to have a meeting to dialogue again, without the sort of tension experienced last year in Vienna.
You raise a very interesting point there, as you can have dialogue, but does it lead to action? Will Saudi Arabia give up some of the almost 1 and a half million barrels it acquired in the last 2 years? Will they change their policy?
I think ultimately, in the interest of all OPEC members, some policy change would happen. The question would then be what real impact the policy change would have, on OPEC nations and on the global marketplace. I do not think a reduction in the number of barrels produced daily, following a policy change, will make a dramatic difference, but the symbolism of such a policy would have a greater impact than the number of barrels taken off the market. It would also be essential to having a fruitful discussion with Russia. If Russia continues to see disorder and a lack of unity in OPEC, one cannot expect her to seriously consider negotiating with us.
So if OPEC took action, would Russia take its foot off the throttle?
I believe Russia would be more amenable to discussions about if there were more internal discipline within OPEC and if member nations could reach a consensus.