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Nigeria’s 50 years in OPEC

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By Ademola Adebisi

 

When Nigeria became a sovereign state on October 1, 1960 and thus assumed the status of an international player, it did not take time before it dawned on the country’s political leaders that, the country would need multilateral diplomacy to pursue and achieve her foreign policy objectives, particularly in the spheres of security, African leadership aspiration, and economic development. Thus, the country soon after her independence, enrolled with the United Nations global family and partly spearheaded one of the building blocks that culminated in the birth of the Organization of African Unity (Monrovia bloc) which has today metamorphosed to African Union.

Eleven years after her independence, Nigeria also sought membership of the Organization of Petroleum Exporting Countries (OPEC) by virtue of her capacity to produce petroleum for export. On July 12, 1971, she was admitted as a member of the organization having met the key requirements of membership.  Five decades in this specialized international body, it is indeed apt to use this occasion of her 50th anniversary in the organisation to,  examine the gains Nigeria has  maximized, the challenge(s) it had encountered and hazard what the future holds for the organization and Nigeria’s continued membership, particularly against the backdrop of the past call for Nigeria’s withdrawal of membership by a section of the Nigerian public, coupled with the diminishing status of oil as a pivotal source of energy.

This appraisal and prognostication are indeed best done if situated within the context of the historical dynamics that propelled the formation of the group and the aims it set to achieve. I summarise:

The pre-OPEC world oil market was one dominated by multinational oil companies.  In those years, they held the vanes for oil prices in their hands and could as such dictate the prices of the commodity to their advantage but to the detriment of the oil producing countries. For example in 1959, they unilaterally reduced the price of Venezuela crude by $0.05 and $0.025 per barrel and the price of the Middle East crude by $0.18 per barrel.  A year after in August 1960, these companies again crashed the posted prices of Middle East crude by between $0.1 and $0.14 per barrel without consideration for the interest of the oil producing countries.  Earlier in 1949, because of the antics of the oil companies, Venezuela had opened communication with four major oil producing countries in the Middle East, namely Iraq, Kuwait, Saudi Arabia and Iran with a view to discussing and agreeing on their common interest. Following the 1960 unilateral action of the oil companies, the first Arab Petroleum Congress was held in Cairo, Egypt and the countries in attendance resolved to demand for consultation by the oil companies before oil prices are tampered with. The meeting also set up an Oil Consultation Commission.

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In response to the 1960 unilateral action of the oil companies, the government of Iraq in September of that year, invited delegations from Iran, Kuwait, Saudi Arabia and Venezuela to a meeting in Baghdad to discuss the oil pricing saga.  The meeting which was held between September 10 -14, 1960, eventually culminated in the birth of the OPEC.  Began by the five founder countries, the organization today has 13 members with its headquarters in Vienna, Austria.

At the onset, the organization set for itself the following aims largely informed by founder members’ experience: “the co-ordination and unification of petroleum policies of member countries and the determination of the best means for safeguarding their interests individually and collectively; to devise ways and means of ensuring the stabilisation of prices in international oil markets with a view to eliminating harmful and unnecessary fluctuations, due regard being given at all times to the interests of the producing countries and to the necessity of securing a steady income for them; to ensure an efficient, economic and regular supply of petroleum to consuming nations; to promote a fair return on the capital of those investing in the petroleum industry.”

In 1968, through Declaratory Statement of Petroleum Policy in Member Countries expressed in Resolution No. XVI.90, the organisation provided what can be called an addendum to its objectives.   The issues or objectives incorporated are: “to undertake, as far as feasible, direct exploration for and development of hydrocarbon resources; to seek participation in the equity of existing concessions, and progressive and accelerated relinquishment of acreage of present contract areas; to establish conservation rules to be followed by operating oil companies; to determine posted or tax reference prices by the government so as to prevent deterioration in the relationship of those prices against the prices of manufactured goods traded internationally”.

Another adjunct to the aims of the organisation was again created when in 1975 in Algiers, the Conference of the Sovereign and Heads of State of the OPEC Member countries adopted the “Solemn Declaration” which contained new policy guidelines.  The organisation declared in that year that,” it should seek in consultation and cooperation with the other countries of the world, the establishment of a new international economic order based on justice, mutual understanding and genuine concern for the well-being of all peoples”.

Flowing from the above, Nigeria has made the following gains: one, through the intervention of the organization in oil pricing and stabilisation of oil supply, Nigeria has earned more revenues from crude oil over the years. This has further enhanced the country’s growth and development. Next is the fact that the organization has offered Nigerians the platform to be engaged in and exposed to international administration as a good number of Nigerians had worked in the organization. Three, the organization has been one of the ready sources of the country’s energy policies as she taps from the research arm of the organization and the policy guide provided by the organization.

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Furthermore, OPEC has also boosted the image and prestige of Nigeria as an oil producing country in the global arena. Nigeria’s membership of the organization has equally strengthened her diplomatic relations with other member countries and some of the beneficiary countries of OPEC International Development Fund.

The major challenge has been the fact that, Nigeria has had to keep to OPEC’s restrictions in the face of her daunting national interest, although this has not prevented the country from seeking concessions when necessary. Yet on account of this, a section of Nigerians felt that, the fortunes of the country could have still been better outside OPEC and thus called for withdrawal of membership. As nothing is certain in international economic relations, the gains Nigeria as a member of the organization has made in the last 50 years, are weighty enough to support her continued membership of the organization. As the global system progresses in the search for alternative sources of energy, the organization may equally have to interrogate its survival in the long run.

In the discussion of the threats of alternatives to oil and gas in the 80s, Vidkum Hvending, the then Norway oil minister had written: “…I see no threat to the future of oil and gas. No other energy source within reach is an alternative to oil in the sense that users would lose interest in, and stop using them. No other energy source can match the convenience of hydrocarbons in mobile applications, and few can match them in widespread, small scale use for stationary purposes. So oil and gas will co-exist for as long as reserves allow, with all the alternative or rather supplementary energy sources that can be mobilized, and will command a price comparable to the high cost of producing those alternatives.” Perhaps the relevance and survival of OPEC lie in the validity of this statement which only time can tell.

 

  • Dr. Adebisi, a political scientist writes from the Federal College of Agriculture, Akure, Ondo State.

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