Wednesday, March 01, 2006

Nigerian Oil Cut Just 20 Percent, Daukoru Tells AP; Production Will Fall If Violence Ends, He Says

In a wide-ranging interview with the Associated Press, Nigerian Oil Minister and OPEC President Dr. Edmund Daukoru said today that a 2-million-barrel supply "overhang" now restraining oil prices would disappear if violence in Nigeria ends.

The Dow Jones news agency also ran a story on Daukoru's visit with a different set of quotes on a variety of topics. That appears below, following the AP story.

That appears below the AP account in tbis post.

Daukoru is in Washington to meet with U.S. Energy Secretary Sam Bodman on oil issues that may include development of the Nigeria-Sao Tome and Principe Joint Development Zone and the acquisition of navy patrol boats to protect offshore supplies from ethic militants whose attacks have shut in sm 455,000 barrels per day.

The Bush Administration seems to have turned a chilly shoulder to Nigeria since early awards in the JDZ did not go the way U.S. majors ExxonMobil and Anadarko would have preferred and as talk of a third-term amendment to the Nigerian constitution has gathered momentum.

One casualty of the chilly relations, the AP indicated, is a supply of the fast, small watercraft that might help Nigeria contain the burgeoning army of Ijaw ethnic militants who have cut Nigerian production back by 455,000 barrels per day. Nigeria is the fifth largest supplier of crude to the United States, but the Bush Administration has seemed indifferent to Nigeria's effort to keep the oil flowing.

The Vanguard of Nigeria reported yesterday, apparently erroneously, that Nigerian production had fallen more than 30 percent since the Ijaw attacks on Royal Dutch Shell on other oil facilities and platforms.

On another topic, Daukoru said he did not have any information that led him to believe Iran would withhold oil from global markets in connection with its dispute over nuclear weapons with European nations and the United Sates.

Here is the AP Story:

OPEC President: Current Oil Prices Fair
Wednesday March 1, 12:13 pm ET
By H. Josef Hebert, Associated Press Writer

AP Interview: OPEC President Says Despite Oversupply of Oil, Current Prices Fair

WASHINGTON (AP) -- Despite a fear factor in the oil markets, there is an adequate global surplus of oil that nevertheless justifies current prices in excess of $60 a barrel, the president of OPEC said Wednesday.

Nigerian Oil Minister Edmund Daukoru, in an interview with The Associated Press, said that $60-a-barrel oil is a "fair price" but he cautioned if prices edged toward $70-a-barrel "everybody gets nervous" about the impact on the global economy.

"A fair price is what markets can sustain," said Daukoru, who is in Washington for a round of visits with administration officials including Energy Secretary Samuel Bodman later in the day.

Daukoru declined to get into reports that Nigeria is seeking help -- in the form of military speed boats and other technologies -- to protect its oil facilities, especially in the Niger Delta.

Nigeria, which produces 2.5 million barrels a day, is the fifth leading supplier of foreign oil to the United States, accounting for about 1 million barrels a day in imports.

Daukoru said he is optimistic that the hostage taking of oil workers and by Nigerian rebels -- which has cut Nigeria's oil production by 20 percent -- can be resolved soon.

Once the hostages are released 75 percent of the lost production can be resumed within a few weeks, said Daukoru. He said most of the lost supplies are precautionary supply cuts and not because of oil facility damage.

In a wide-ranging AP interview, Daukoru attributed much of the tightness of the world oil markets to a lack of refineries -- not production decisions.

"We do believe there is enough spare capacity" among producers. He predicted a global supply surplus of as much as 2 million barrels a day in the second quarter at current production levels -- an indication that OPEC producers may be ready to curtail their production levels.

The Organization of Petroleum Exporting Countries are scheduled to meet March 8 to decide on production levels. At a meeting in January, the OPEC producers, which account for 40 percent of the world's oil production, decided to make no change.

Referring to an expected 2 million barrel a day "overhang" of crude inventory, Daukoru said, "If that is not oversupply, I don't know what is oversupply."

He also said he has no reason to believe that Iran would withhold oil from the markets because of its dispute over nuclear development. Iran has given that assurance, he said.

And here is the Dow Jones report on Daukoru's visit, including the revelation that he had requested the meeting with Bodman:

(DOW JONES) DJN: =DJ UPDATE: OPEC Pres Seeks Investment In Nigeria Oil Sector

By Maya Jackson Randall

WASHINGTON (Dow Jones)--Nigerian Oil Minister Edmund Daukoru said Wednesday
his visit to Washington this week was intended to stress the need for
investment in Nigeria's oil industry, to help it deal with the problems that
have cut off almost 20% of its daily crude oil output.

"We wanted to let the U.S. know we're ready to take on investment in this
sector in Nigeria. We would like the U.S. to spread the word that Nigeria
has come a long way," Daukoru told reporters after meeting U.S. Energy
Secretary Samuel Bodman. "This is a problem that has to do with
development," he said, referring to the attacks by rebels on key oil
facilities in the Niger Delta.

"In the area of development, we will need further assistance ... to protect
future energy supply," said Daukoru, who is also current president of the
Organization of Petroleum Exporting Countries.

Nigeria, which produces 2.5 million barrels a day, is the fifth-leading
supplier of foreign oil to the U.S., accounting for about 1 million barrels
a day in imports. It's also West Africa's diplomatic and political

For the second time this year, rebels in the African nation's Delta region
have attacked oil operations and taken hostages. Six hostages were released
Wednesday, but two Americans and one Briton remained in captivity.

Daukoru said he's optimistic that the hostage-taking situation can be
resolved soon, adding that once all the hostages are released, it will take
"a couple of weeks" for production to be back in the market.

U.S. Department of Energy spokeswoman Anne Womack Kolton later said the
Nigerian minister was referring to the need for private sector investment in
Nigeria's oil industry. She said the meeting with Bodman happened at
Daukoru's request and noted that the oil minister also called on increased
transparency for oil demand data.

Despite the recent wave of oil attacks in Nigeria and an attempt last week
on a Saudi oil-processing facility, Daukoru said he's confident OPEC can
deliver the oil supplies needed to meet global demand.

"What happened in Saudi Arabia is what you might call just a distraction. As
I understand it, no damage was done," he said, saying that the fact that the
attempted attack was blocked should provide some assurance to the market.

Nigeria's military attacks, however, are related to the need for greater
development in the country, Daukoru said. He said he spoke to Bodman about
the need for further assistance on a bilateral basis to encourage private
companies to invest in the development challenges of the oil-rich Niger
Delta, which he said would help protect the country's oil supplies.

Daukoru also said he wants to increase his dialogue with the U.S. just as he
has done with the European Union. The EU and OPEC have held two joint
sessions to discuss ways to stabilize oil markets, most recently meeting in
December at OPEC headquarters in Vienna. The minister said Bodman assured
him that he is interested in similar talks.

"I just need to report back to the OPEC conference and see how we can
construct the language with the U.S.," said Daukoru.

-By Maya Jackson Randall; Dow Jones Newswires; 202 938 2381;

(END) Dow Jones Newswires
March 01, 2006 18:18 ET (23:18 GMT)

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