Kachikwu says OPEC exemption grew Nigeria‘s forex reserves by $20bn

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu on Wednesday said that crude oil production exemption granted to Nigeria in 2016 by the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC members led by the Russian Federation helped the country to raise her foreign exchange reserves to $45 billion from $25 billion.

Kachikwu, stated this in a podcast that was released by his office in Abuja, in which he explained how his shuttle diplomacy across member countries of OPEC resulted in the famous production cap agreement that has helped shore up oil prices in the international market.

He said that Nigeria’s request for a production cap exemption during the negotiations ensured she was able to produce and sell more oil, which resulted in about $20 billion addition to her foreign exchange reserves.

“We took over OPEC when prices were plummeting and countries were fighting over who would bring in barrels. It was a very tough time to lead OPEC and my job was stopping the attrition war and see how everybody could cooperate and help OPEC regain its credibility, relevance and premium pricing, and this resulted to the OPEC declaration,” Kachikwu said.

He noted that Nigeria played very key roles in all the negotiation stages, as well as in leadership of subcommittees, and in crafting of the final agreements parties were then meant to sign.

“But more importantly for us, was that we succeeded in negotiating an exemption at a time when countries were compelled to reduce volumes drastically to shore up the volumes that were to be taken out of the market.

“It wasn’t an easy negotiation for Nigeria but we got it and subsequently renewed the exemption over two periods. This stabilised supplies, income, our budget was able to get largely funded.

“We began to see our reserves for the first time grow dramatically from an all-time $25 billion to as high as $45 billion currently – $20 billion movement in terms of reserves growth,” the minister explained.

He stated that resolving the Niger Delta problem was significant in achieving development, adding that getting the OPEC to elect Dr. Barkindo Mohammed, as its Secretary General has also helped Nigeria regain its relevance within the cartel.

He, however, suggested that Nigeria would need to take proactive steps to enjoy the revenues from the improved oil prices, adding, “We need to continue to look at the global oil market that continues to do a pendulum movement, we need to do this because the earlier Nigeria can reap the best benefits in terms of the incomes from this resource, the better we can do our diversification project, the better we can finance our budgets, the better we can create employment, peace and harmony and the better lifestyle that we have as Nigerian citizens.”