afrol News, 17 March - As oil prices have risen sharply the past week, Africa's main oil producer, Nigeria, is seeing little of the possible enhanced revenues. Nigeria has cut oil production sharply, following OPEC directives, as the country had a reputation of not following the quotas set by the international oil cartel.
Crude oil prices rose sharply in the international market this week, following an OPEC decision to keep production quotas low for another three months period. Nigeria's major export crude, the Bonny Light, was traded at US$ 23.92 a barrel in London on Thursday, as against US$ 22 at the beginning of the week.
The sharp rise in oil prices is however closely connected to OPEC's low production quotas, thus totally cutting oil export revenues. Nigeria has a reputation of cheating on the quotas set by the cartel, and the enhanced OPEC focus on Nigeria at this production cuts have forced the country to significantly slow down its production to reach OPEC quotas.
International oil producers thus reported last week they indeed had been hit hard by the government's attempt to follow OPEC's quotas. The largest foreign oil producer in Nigeria, Royal Dutch/Shell, informed the press it had cut back its production by 24 percent in February compared to the production volume of February 2001. Also TotalFinaElf said its production in Nigeria was 20 percent down over the past year.
OPEC earlier has claimed that Nigeria was producing 300,000 barrels of oil per day above its assigned daily quota of 1.8 million barrels. Now, the government confirms the reports by its oil producers, saying it had cut back production by 180,000 barrels per day in January and was continuing to make further cuts. National oil production data are however classified as a national secret.
Nigeria's economy is heavily dependent on its oil exports, constituting 45 percent of the country's GDP and about 85 percent of all foreign exchange earnings. Little of these revenues have however reached the Nigerian population, and estimated 66 percent falling below the poverty line of about a dollar a day (up from 43 percent in 1985). Corruption, mismanagement and lack of transparency are held as the principal causes for this negative trend.
The cuts in production, although somewhat counterweighted by increased prices, will further reduce Nigeria's ability to modernise its own oil sector and embark on the much needed development of other industries.
Sources: Based on Nigerian govt., press reports and afrol archives