Nige­ria is ready to cap its oil out­put

The Star Early Edition - - BUSINESS REPORT - Elisha Bala-Gbogbo

NIGE­RIA sig­nalled 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 said 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. 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 on Jan­uary 1. Other pro­duc­ers, in­clud­ing Rus­sia, joined the deal, which was ex­tended to March 2018. Iran was al­lowed to raise pro­duc­tion by 90 000 bar­rels a day as it was re­cov­er­ing from sanc­tions.

Sup­port

“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 said on Wed­nes­day at a con­fer­ence in Is­tan­bul.

Opec 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 on 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 on Mon­day at the Is­tan­bul event.

Bench­mark

“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. It 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.”

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