Opening address to the Plenary Session of the 143rd (Extraordinary) Meeting of the OPEC Conference

No 20/2006
Abuja, Nigeria
14 Dec 2006

by HE Dr Edmund Maduabebe Daukoru, President of the Conference and Minister of State for Petroleum Resources of Nigeria

Excellencies, ladies and gentlemen,

Welcome to Abuja, the capital city of my home country, the Federal Republic of Nigeria, for the 143rd (Extraordinary) Meeting of the OPEC Conference.

This is only the second occasion on which Nigeria has had the honour of hosting a meeting of the supreme authority of our Organization. Therefore, we are delighted to have this opportunity to extend the warm hand of friendship to all of you visiting our country for this important event, and to make your stay both an enjoyable and productive one.

We must cast our minds back 34 years to November 1972, to find the previous occasion on which Nigeria hosted the OPEC Conference, and that was at the Organization’s 31st Meeting in the former Federal capital of Lagos. This occurred one year after Nigeria became a dedicated Member of this esteemed and accomplished group of oil-producing developing countries.

Since then, Nigeria’s development as one of the world’s leading oil-producing countries has proceeded in parallel with the evolution of OPEC as a major presence and force for good on the world energy stage. We are proud to have been part of this process, which has been of great benefit to mankind as a whole. We have shared both the good times and the bad times with the Organization and our fellow Member Countries. However, regardless of the prevailing market outlook at any one time, we have always been encouraged by the beacon of optimism that shines incessantly from within our ranks.

When we held our last Ordinary Meeting of the Conference in Vienna in September, we decided to review market developments and the outlook for 2007 at today’s Extraordinary Meeting here in Abuja.

However, in the third week of October, we considered it necessary to hold a Consultative Meeting of our Conference in Qatar, after the heavy fall in prices that had occurred since August, ending a period of protracted upward pressure on prices that had prevailed since spring 2004. It was clear by October that crude oil supplies were well in excess of demand, with an above-average level of stocks in OECD countries, and that this imbalance in fundamentals was destabilising the market. It was necessary to resist, at its early stages, a possible heavy downward price spiral, which would be highly damaging to the market.

Our decision in Doha to cut production levels by 1.2 million barrels a day, with effect from 1 November, appears to have largely achieved its purpose of stabilising markets and arresting the sharp fall in oil prices. However, looking at the situation in a longer-term perspective, the sharp fall in prices may have indicated the end of the steady bullish phase that had characterised the market for more than two years. We shall be looking very carefully into this matter at today’s meeting.

Our task, however, will not be easy, since there is a wide range of oil demand forecasts for 2007, mirroring ambiguous sets of global economic prospects and difficult-to-predict oil demand growth dynamics in developing countries. Also, a widely forecast significant increase in non-OPEC supply growth suggests a possible drop in demand for OPEC oil next year, and this prospect is, indeed, one we were seeking to redress in Doha last month and one which will be discussed at length here in Abuja today. Also of particular concern to us is the recent big fall in the value of the dollar, which is now at its lowest level against the euro for 20 months and, among other things, is affecting the purchasing power of our petroleum revenue.

Staying in the financial field, we remain apprehensive about the way speculators continue to have an impact on the crude market, sometimes greatly exacerbating price trends — this is now operating on the downside, in contrast to the upside for the two years before that. It was very timely, therefore, that we held a highly informative “Workshop on the impact of financial markets on the price of oil” in Vienna early last week, in conjunction with the European Union, as part of the energy dialogue we established with this vast regional body last year. We gained some valuable insights there on serious issues that require urgent attention, if there is to be lasting stability in the market.

Indeed, all OPEC’s actions in the market are governed by our abiding commitment to market order and stability, with reasonable prices, secure demand and supply and fair returns to investors. This commitment covers the short term, the medium term and the long term, reflecting the consensus view within the industry that fossil fuels will continue to dominate the global energy mix for decades to come and will remain vital for supporting the projected expansion of global economic growth. It also recognises the need to handle the pressing environmental challenges that face the industry at all levels — as was seen, for example, at the recent round of UN-sponsored climate change negotiations in Nairobi — and it incorporates the spirit of ‘Johannesburg 2002’, with regard to the provision of modern energy services right across the developing world, with the accent on the eradication of energy poverty.

I hasten to add, however, that OPEC’s commitment is part of what we consider to be a global commitment, since we believe that all parties are responsible for the achievement and maintenance of an orderly oil market, since they all benefit from it, together with the world community as a whole. We are pleased, therefore, to welcome to this Conference high-level representatives from the following non-OPEC oil-producing countries: Angola, Egypt, Mexico, Oman and Sudan. Their presence here in Abuja, as observers, provides weighty moral support as we go about our deliberations on establishing sustainable market order and stability.

Excellencies, ladies and gentlemen,

Let me close by saying that I am proud that such important talks are taking place on Nigerian soil, underlining the importance our country attaches to global issues affecting the destiny of mankind.

Let us now proceed with the meeting.

Thank you.