The recovery of Nigeria from recession has been given a further boost by the Organisation of Petroleum Exporting Countries, OPEC. While the organisation and 10 non-member countries agreed last Thursday to extend cuts in oil production by nine months to March 2018 to further stem the global glut of crude in the market and prop up prices, but Nigeria and Libya were exempted from the cuts because their production had suffered disruptions on the back of unrest and militant attacks.
Ibe Kachikwu, minister of State for Petroleum Resources, said Nigeria was not opposed to joining the production cuts in a bid to prop up oil prices, he said, “Our numbers don’t justify us joining the pack yet. But, quite frankly, when we do, the pressure is going to get on for us to join the cut team. And Nigeria is not averse to that because I think everybody needs to make the necessary sacrifice to help the price stability on a worldwide basis.”
He explained that Nigeria’s oil production was still hovering around 1.5 million barrels per day, down from around 2.2 million bpd, as a lot of the pipelines affected by militant attacks had yet to be repaired. “Forcados is beginning to load but the reality is that those are test loadings. We still need to repair a lot of the secondary infrastructure that were damaged by militancy. It will take us about six months to get there. But my projection is that within the six to nine months window, all things being equal, militancy remaining calm and the investment that are required being urgently done to repair the existing pipelines, we should get to the sort of figure that we had before,” said Kachikwu.
The extention of output cut deal, however, failed to impress the market as the global oil benchmark, Brent crude, fell by 4.2 per cent or $2.27 to $51.69 per barrel as of 7:20pm Nigerian time.
OPEC members and non-OPEC producers, including Russia, reached a deal in December to cut output by 1.8 million barrels per day for six months from January 1, 2017.
At OPEC’s 172nd meeting in Vienna on Thursday, member countries and 10 participating non-OPEC producing countries underscored the importance of continuing efforts to help stabilise the oil market in the interests of all oil producers and consumers.
“In this regard, the aforementioned non-OPEC countries decided to extend their production adjustments, which originally started January 1, 2017, for a further period of nine months, beginning July 1, 2017,” the group stated.