marc, I am beginning to believe that the OPEC situation is more like 1973 or 1980 when OPEC cut quotas and meant business, and stuck by their guns. Yes parties like Venezuela, Kuwait, and Mexico could cheat, but it may not be in their economic self interest to do it.
Nigeria is slightly different since the production contracts with the private companies are output-based contracts, and the Government carries the burden/benefit of any oil price fluctuation. Thus there is little incentive for the producing companies to slow down production...
On the other hand, the Government of Nigeria faces a self-imposed October 1st deadline to restore democracy in that Country. This was not a problem when General Sani Abacha was the only presidential candidate nominated by all five of the parties that the Government authorized to participate in the elections.
But God played a wildly humorous trick on the Nigerian Militay Rulers and croaked the evil, murderous Abacha out of the blue with a heart attack. Now the ethnic Northerners who run the Army and hence the Country are not likely to honor that October 1st "promise". However the ethnic Southerners, who have been beggared and impoverished by the Northerners/Army have been demonstrating lately, and have had numerous demonstrators shot down. In fact the Army went so far recently as to send soldiers into Lagos Hospitals to execute wounded demonstrators. So the ethnic Southerners are seething- and they are the ethnic majority in the Country to boot (shades of former South Africa with a repressive minority regime). And the oil facilities are located exclusively in the South of Nigeria.
So beginning this fall do be surprised potentially if civil war breaks out in Nigeria. This will make it difficult for workers to get to the oil facilities in order to work....The point being is that after October 1st, Nigerian production, the potential major cheater in this arrangement, will become suspect....
Sincerely,
Doug F.
PS. The Nigerian Soccer team at the World Cup is made up almost exclusively of ethnic Southerners, Yoruba and Ibo. Let's see how the Government handles having a bunch of Nigerian Southerners coming back home as Nigeria' s heroes.... |
