Page 5 - AfrElec Week 48

AfrElec COMMENTARY AfrElec
in November but did not give an exact gure on oil output in that month. According to o cial data, Nigerian oil yields hit 2.04mn bpd in the third quarter of 2019.
Sylva’s claim seems a bit far-fetched, given Nigeria’s lengthy history of exceeding its allot- ments. But the West African state may be suc- ceeding via an accounting trick – that is, by counting some of its new liquid hydrocarbon production as gas condensate rather than crude oil. At the OPEC meeting, it may seek to expand the scope of this reclassi cation practice.
With uncertainty over oil output, Nigeria’s power indusry still cannot rely on the oil sector for steady supplies of gas for the country’s idle gas- red power plants.
Ecuador’s membership
Meanwhile, one of OPEC’s South American members may be preparing to discuss a more fundamental matter – namely, that of member- ship – at the upcoming meeting in Vienna.
Ecuador’s government revealed in October that it had decided to withdraw from OPEC at the end of 2019. It explained its decision by say- ing that the cartel’s policy was not compatible with its e orts to increase oil revenues.
is move reportedly surprised OPEC o - cials, but it is not entirely out of the blue. For one thing, it is not unprecedented: Ecuador dropped out of OPEC in 1992 before rejoining in 2007. For another, Ecuador has had a long-standing practice of producing more than its allotment under OPEC’s quota system.
Nevertheless, Quito’s announcement has been overshadowed by subsequent events. e capital and other Ecuadorean cities have recently been rocked by widespread protests over auster- ity programmes designed to support a $4.2bn loan deal with the International Monetary Fund (IMF) in general and over the government’s deci- sion to li fuel subsidies in particular.
And now it appears that Ecuador may be backtracking. Sources familiar with the matter recently told S&P Global Platts that Ecuador was considering remaining in the cartel. It is not yet clear whether there is any substance to these reports. One source said that the parties were conducting talks on withdrawal “on a very high level”, while another said that Ecuador was not likely to waver in its push to leave.
What’s next for Brazil?
If Ecuador drops out of OPEC, the number of the group’s member states will drop from 14 to 13 – and it may not rise again for some time.
True, another South American state – Brazil – has been irting with the idea of joining OPEC. In late October, President Jair Bolsonaro said he had received an informal o er of membership from Saudi Crown Prince Mohammed Bin Sal- man (MBS). He expressed keen interest in taking this step, saying: “Personally, I would really like to see Brazil become a member.”
But Bolsonaro also stressed that he was not ready to throw the full weight of his o ce behind the Saudi o er. Brazilian o cials should rst dis- cuss the invitation with the president’s own eco- nomic advisors and with representatives of the Energy Ministry, he said. Until they accomplish this, they must not make any formal requests to join OPEC, he said.
No such request is likely to be forthcoming at the cartel’s next meeting. Even if the Brazilian president likes the idea of joining OPEC in the- ory, he has indicated he will not act on impulse. He has probably been reviewing responses to his announcement – and noticing that most indus- try analysts agree that seeking membership in the cartel would not suit Brazil’s interests.
As a result, OPEC will probably not have much to say about Brazil and the possibility of keeping its number of members at 14 later this week. ™
Week 48 05•December•2019 w w w . N E W S B A S E . c o m P5