Nigeria, Libya exempted from OPEC/non-OPEC supply cuts
Nigeria signaled its willingness to cap its oil production to support OPEC’s efforts to ease a global supply glut.
The output limit would come into play when Nigeria can stably pump 1.8 million barrels a day, the country’s oil minister Emmanuel Kachikwu told reporters Wednesday in Abuja. That’s about 100,000 barrels more than it’s currently producing. The country’s output has recovered this year after militant attacks had damaged export pipelines and other facilities.The most important market news of the day.
Nigeria and Libya were exempted from cuts agreed to by OPEC and other large producers in an effort to trim a global glut. OPEC decided late last year to reduce its output by 1.2 million barrels a day to 32.5 million starting Jan. 1. Other producers including Russia joined the deal, which was extended through March 2018. Iran was allowed to raise production by 90,000 barrels a day as it was recovering from sanctions.
“As a serious member of OPEC, we stand ready to support the cuts when we are sure that we can have a stable predictable production,” Kachikwu said. “You have to watch it for a couple of months to be sure that what you see as peace is in fact sustained.”
OPEC wants an “orderly recovery” in oil production from Libya, Nigeria and Iran and has a flexible output target under its cuts agreement to accommodate more crude from the three member nations, the group’s Secretary-General Mohammad Barkindo told Bloomberg Television on Wednesday at a conference in Istanbul.
The Organization of Petroleum Exporting Countries was anticipating a revival in production from the three when it set a targeted output range from 32.5 million to 33 million barrels a day under its November agreement, Barkindo said.
OPEC pumped 32.6 million barrels a day in June, and its output exceeded demand in the first half of this year, according to a report the group issued Wednesday. Libya and Nigeria may be asked to cap their output soon in an effort to help re-balance the market, Kuwaiti Oil Minister Issam Almarzooq said Monday at the Istanbul event.
“We still are below the 1.8 million barrel a day benchmark set for us by OPEC,” Kachikwu said. “I think that over the next one or two months, hopefully, we can get to that point where we can say the recovery has been tested, it is systemic and predictable.”
Nigeria, which hasn’t been above that level since February 2016, has a capacity of 2.2 million barrels a day, according to data compiled by Bloomberg.
Nigeria will miss the OPEC and non-OPEC Joint Technical Committee meeting in Russia later this month. Kachikwu plans to meet with Saudi Arabia and Russia after that.
“I will find time after the meeting in St. Petersburg to dialogue with my colleagues from both Russia and Saudi Arabia and to further explain Nigeria’s position,” he said. “I think we’re fairly in consensus on what our position is, there isn’t any disagreement on that.”