Nigeria production inches closer to OPEC cut deal

Nigeria may join the oil output cut deal reached by the Organisation of Petroleum Exporting Countries (OPEC) following the continuous recovery of the country’s crude oil production.

Nigeria, which is exempt from the current OPEC cuts, alongside Libya and Iran, has witnessed improvement in oil production to its highest level in more than a year.

Oil production tumbled to 30-year lows of around 1.2m barrels per day (b/d) in 2016, from 2.2m b/d, as attacks on oil facilities in the Niger Delta increased.

But following extensive engagement with militants by the Federal Government, as well as the return of the Forcados terminal, a key Nigerian crude oil pipeline, production has lifted export towards the 2 million b/d mark and is expected to increase even further.

With production now near its full capacity of 2.2m b/d, Nigeria could be asked to join the OPEC cut deal.

Thirteen OPEC members and 11 nonOPEC countries, led by Russia, agreed on November 30, 2016, to reduce their production for six months, beginning from January. The output cut was extended again in May 2017, with Nigeria and Libya further exempted.

Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had in May expressed doubt if the country would get a third exemption.

“I expect we (Nigeria) will get OPEC exemption, but one year from now will it be renewed? I am not too sure,” he said.

Despite strong OPEC and non-OPEC compliance to the output cut, surging US shale output and production gains from Libya and Nigeria appear to be weighing on prices, along with an uncertain global demand outlook.

OPEC is due to meet on November 30 in Vienna where it may take position on this.