With the preparation for the 14th virtual meeting of the Organisation of Petroleum Exporting Countries slated for March 8 to 12, 2021 in top gear, experts have explained why the summit cannot influence the pump price of Premium Motor Spirit in Nigeria.
In separate chats with Financial Street in Lagos on Thursday, the experts asserted that OPEC, as a global body of oil-producing countries, “does not meddle” in national or continental issues.
The oil pump price jumped on Thursday after OPEC and its oil-producing allies said they would keep production largely stable.
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Reacting to this, an energy expert, Mr. Bala Zakka, said the meeting would have nothing to do with petrol pump price in Nigeria, even as he ruled out OPEC as an African cartel.
According to him, any decision taken by OPEC is expected to have a global effect, not regional.
“It (the meeting) will not affect the price of petroleum products. OPEC is not an African cartel; it is a global oil cartel. So, whatever it does is expected to have a global effect, not continental or national. That is what we need to check. So, whenever OPEC carries out an action as a body, it is not targeted at a particular country or continent,” he said.
Zakka pointed out the only time OPEC could interfere.
“OPEC can only carry out an action targeted at a particular country, if the country is a member of OPEC and having issues that will lead to the global distortion of supply globally. For example, when Libya was having problem, its production dropped by less than 10 per cent, and that has a global effect; so, OPEC has to intervene.
“Anytime OPEC comes out with daily supply idea, it is about what it will be contributing to the global community. If something happens to a member country, OPEC may consider,” he added.
Similarly, maritime lawyer and energy expert, Emeka Akabogu, told Financial Street that OPEC “is not involved in the supply of petrol,” hence, could not, in any way, influence the pump price.
Akabogu, however, said that the only way the group could influence the pump price is if it was directed towards production cost.
His words, “I don’t know how the OPEC meeting will affect the petrol pump price in Nigeria. First of all, OPEC is not involved in the suppply of products. As an organisation of petroleum-producing countries, it has nothing to do with the refined petroleum products. The only way the OPEC meeting can impact on pump price is if it is directed towards the production cost by virtue of which the price of crude oil increase.”
He, nevertheless, reiterated that the production cost had nothing to do with the pump price.
“But don’t forget that the production cost of OPEC doesn’t have anything to do with the petroleum pump price. It may influence a price movement, if other factors are in play. But there was a time OPEC reduction in supply of crude oil didn’t affect the price.
“The point is, if it affects crude oil pricing, that may result in flat benchmark on refined petroleum products. So it is neither here nor there. The flat rate for today is based on benchmark, which has been in place in the last one week or so.
“It may determine the prices, indirectly, by virtue of relevant national petroleum pricing outcome. That is the only way,” he added.
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