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Reuters: OPEC should await Feb cuts before new moves-Daukoru

16/01/07

By Neil Chatterjee and Nidhi Verma

NEW DELHI (Reuters) – OPEC should see the effects of its February crude oil supply cut before deciding on any deeper reductions, Nigerian oil minister Edmund Daukoru said on Tuesday, although he reiterated his concerns about oversupply.

“I think we have to take a wait-and-see (approach). After we implement 500,000 barrels a day (cut), we have to see how the market responds,” he told reporters on the sidelines of the Petrotech conference in New Delhi.

Daukoru’s comments come after other OPEC members called for an emergency meeting of the Organization of the Petroleum Exporting Countries before February, after a 14 percent fall in crude prices so far this year to just under $53 a barrel.

OPEC’s next scheduled meeting is March 15, and Daukoru said he was not aware of any meeting before this.

Venezuela on Monday recommended an emergency OPEC meeting to reverse this year’s “worrying” tumble in oil prices, saying global markets are oversupplied by up to 1 million barrels per day (bpd).

Energy Minister Rafael Ramirez said oil prices had fallen “too much” and that Venezuela and several other OPEC nations were recommending an emergency meeting.

On OPEC supply, Daukoru said: “Right now, supply is well ahead of demand. If nobody wants your commodity it’s better to leave it in the ground.”

The cartel cut production from November 1 by 1.2 million bpd, and an additional reduction of 500,000 bpd is due to take effect from February 1.

“I think prices are low, the market is oversupplied,” he said earlier. “There is a lot of non-OPEC production coming into the market,” he said, adding demand security was a concern.

Daukoru also estimated earlier on Tuesday that the global oil market was still oversupplied by about 1 million bpd, despite OPEC having fully implemented the November cuts as promised, in an attempt to shore up prices.

NIGERIA COMPLIES WITH CUTS

Nigeria is producing 2 million bpd, Daukoru said, which would be in line with the country’s output target once the Feb 1. cut comes into place.

Nigeria’s output target stands at 2.044 million bpd from February 1, after the country cuts a pledged 142,000 bpd of its output.

Nigeria’s output has been crippled by militant attacks and pipeline leaks in the Niger Delta, the country’s main production area, for the past year.

These have left Africa’s biggest producer losing around 800,000 bpd or more than a quarter of the country’s output capacity, according to estimates by Nigerian oil officials.

“Every effort is being made — EA is a priority — I cannot give you a date,” Daukoru said when asked about efforts to restore the Nigerian oil production.

Nigeria’s biggest foreign operator Royal Dutch Shell has kept its Forcados oilfield and the 115,000-bpd EA field shut for nearly a year after they were attacked by the Movement for the Emancipation of the Niger Delta (MEND).

Daukoru’s remarks implied that the lost crude output will last a while longer.

In the latest of a string of attacks, gunmen killed 12 people including four community chiefs on a commercial boat in the remote creeks of Nigeria’s oil-producing Niger Delta, police said on Tuesday.

Western oil companies evacuated staff from three oilfields in the area, accounting for about 60,000 bpd of production, but company spokesmen said they could not confirm if output had stopped.

As well as the problem of getting fields back online, Daukoru pointed to delays in investment due to falling prices. While oil prices have fallen, development costs have not come down, he said.

(Additional reporting by Maryelle Demongeot in Singapore)

© Reuters Limited. All Rights Reserved.

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