Leading energy expert, Mr. Dan Kunle, has said Nigeria’s time in OPEC is up:
What, if at all, do you think the exit of Qatar will have on OPEC?
The exit of Qatar indicates that the Club, has a crack on its wall. And this crack may further expand for more members to exit – or to simply become passive. It also confirms what I said in my last interview with your magazine: the discovery of oil and gas in the most remote parts of the world and the high-level efficiency of drilling technology; offshore and onshore, as well as the fracking revolution of the United States have all combined to put an unbearable pressure on the oil cartel called OPEC.
It is very unlikely to see new oil producing nations joining OPEC because oil as a commodity has become a common product with fast-diminishing value and applications. In another 5-10 years, crude oil may not be too strategic as to warrant the all-important OPEC existence.
Was Qatar’s exit inevitable, is it a continuation of the war with Saudi Arabia and the other Gulf states?
The Gulf nations have their historical misunderstanding and disagreements, which informed their delicate interstate relationship since 1923. The state of Qatar may appear very small like Kuwait or Oman, but they have their sovereign status to be defended at all times.
Globalisation, technology and the advancement of telecommunication and tele-broadcasting have brought enormous pressures on the Gulf states. For these reasons their orientation and international perceptions are influenced by the multipolar world in which they find themselves. So, it would not be out of place to see Qatar trying to defend its sovereignty and status within the Gulf states.
A typical case in point for Qatar is her world class airline that now has to fly over the Gulf Sea to connect North Africa and the rest of the world because her big neighbor, Saudi Arabia, appears not to allow Qatar Air to fly over her airspace. This type of cold war and mutual distrust are natural and not new to human existence.
It is very unlikely to see new oil producing nations joining OPEC because oil as a commodity has become a common product with fast-diminishing value and applications. In another 5-10 years, crude oil may not be too strategic as to warrant the all-important OPEC existence.
What does Qatar’s exit from OPEC on January 1, 2019 mean for Nigeria?
Nigeria has no business in OPEC anymore. A cartel such as OPEC can only be sustained if the commodity whose supply it is trying to regulate is limited in quantity. Unfortunately, oil and gas are not limited resources anymore. Perhaps, Nigeria has been in OPEC all these years for political friendship with Saudi Arabia.
Even at that, what has that political friendship, attracted to Nigeria economically all these years? In the new global economy, which is driven by the Information Super Highway (Internet/Digital Age), physical commodities are becoming less important because they can be accessed by the consumers wherever they are located.
The barriers to trade that the cartel tried to create have been broken by technology. Nigeria should do what Algeria and South Africa have done and stop chasing shadows. Algeria and South Africa have, in collaboration with the United States, deployed the most sophisticated geophysical technology to ascertain how much shale gas they have. It has been confirmed that both countries are sitting on about 900 trillion cubic feet of Gas each.
A typical case in point for Qatar is her world class airline that now has to fly over the Gulf Sea to connect North Africa and the rest of the world because her big neighbor, Saudi Arabia, appears not to allow Qatar Air to fly over her airspace.
Is OPEC in its final death throes?
I can foresee the gradual transformation of OPEC from a cartel to a bilateral and multilateral trade agreement, such as NAFTA. It would be difficult for the cartel to influence and assert oil supply control on the world market as was the case in the 70’s and 80’s. As is the case with human history, transformation and change are the most constant phenomenon of life.
The managers of OPEC should start to plan for their transformation to something else. Even the energy-hungry countries in Europe and China would not be influenced by OPEC cartel arrangement because of the flexibility of supply sources within and from other parts of the world.
