Opec Refuses Quota Increase for Nigeria

Talks by the Organisation of Petroleum Exporting Countries (OPEC) on Wednesday broke down in acrimony leading to a refusal to jerk up oil production quota for Nigeria and other oil exporting nations.

The group opened its 159th conference, described as the worst by Saudi Arabia, without an agreement to raise output after Saudi Arabia failed to convince the cartel to lift production.

“This is one of the worst meetings we have ever had,” said Saudi Oil Minister Ali al-Naimi.

Naimi said six countries in the 12-member group were opposed to an increase in output.

Nigeria, Africa’s biggest oil exporter has been rooting for increase in quota to meet up with production shortage between 2004 and 2010.

The county’s delegation headed by Permanent Secretary, Ministry of Petroleum Resources; Goni Musa Sheikh could not however convince OPEC for quota increase.

Nigeria with over 2.6 million production capacities needs the OPEC’s nod to up the 1.78 million barrels quota.

“Unfortunately we are unable to reach a consensus to reduce or raise production,” OPEC’s Secretary General Abdullah El-Badri told reporters.

He said Gulf Arab countries had proposed an increase to 30.3 million barrels a day, compared to current supply of about 29 million bpd, including Iraq which is not bound by an OPEC quota.

El-Badri said the effective decision was no change in policy but that he hoped OPEC would meet again in three months time. Naimi said the next meeting would be on December 14.

The failure to reach an agreement will be a blow for industrialized consumer countries hoping OPEC would take action to stem fuel inflation.

Brent crude rose $1.64 a barrel to $118.42. No date has been set for another meeting.

Gulf Arab delegates said Iran, Venezuela and Algeria were among those who refuse to consider an output increase.

Non-Gulf delegates said Saudi Arabia had proposed an increase on top of April supplies that was too high for them to contemplate.

Naimi said Saudi was committed to supplying market needs. Earlier in the week a Gulf official said Saudi was already raising output by at least 500,000 bpd in June to 9.5-9.7 million bpd.

Saudi output was last as high in the middle of 2008 after oil prices set a record $147 a barrel, shortly before recession sent prices crashing.

Forecasts suggest more oil is required to stop oil prices rising again.

OPEC’s Vienna secretariat sees demand in the second half of the year 1.7 million bpd higher than current cartel output.

Meanwhile, oil swiftly rose above $100 a barrel Wednesday in Asia amid signs OPEC may raise its crude production quotas at a meeting in Vienna.

Benchmark oil for July delivery was down 69 cents to $98.40 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract added 8 cents to settle at $99.09 on Tuesday.

In London, Brent crude for July delivery was down 49 cents to $116.29 a barrel on the ICE Futures exchange.

Investors will be closely watching the outcome of a meeting later Wednesday of the Organization of Petroleum Exporting Countries, a cartel that controls about 40 percent of global crude output.