Fg Agrees To Deeper Cuts As Opec+ Extends Output Curbs
Nigeria has said it was ready to make additional oil output cuts from July to September to compensate for producing more than its quota in May and June, when OPEC and its allies implemented a deal to curb supply by record amounts.
“Nigeria reconfirms our commitment under the existing agreement and also subscribes to the concept of compensation by countries who are unable to attain one hundred per cent conformity in May and June to accommodate it in July, August and September,” the Federal Ministry of Petroleum Resources said in a statement on Twitter.
The agreed cut for Nigeria is about 417,000 barrels per day, which is about 23 per cent of the country’s production. However, Nigeria’s crude production stood at 1.61mn b/d in May, a full 200,000 b/d above its May-June Opec+ 1.41mn b/d output quota, according to the Ministry, which cited data from the Nigerian National Petroleum Corporation (NNPC).
Despite being above its May-June quota, the ministry said Nigeria’s May output tally was still 216,000 b/d below its 1.83mn b/d production baseline of October 2018, pointing to notional compliance of 52 per cent. Current daily crude production stands well below the May-June quota and that “will translate to full compliance by end of June 2020”, the ministry said.
This is as OPEC and its allies led by Russia on Saturday agreed unanimously to extend the first phase of the production adjustment agreed at the 10th (Extraordinary) OPEC and non-OPEC Ministerial Meeting for a further month, to now run from 1 May 2020 to 31 July 2020.
The producers known as OPEC+ previously agreed to cut supply by a record 9.7 million barrels per day (bpd) during May-June to prop up prices that collapsed due to the coronavirus crisis. Cuts have been due to taper to 7.7 million bpd from July to December.
The 179th Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC) held via videoconference, emphasized that the production adjustments in May, as well as the gradual relaxation of many of the lockdown measures as a result of the COVID-19 pandemic across the globe and an economic pick-up, had contributed to a cautious recovery and the return of more stability in the oil market.
The meeting also noted the positive ramifications of the decision taken by all Participating Countries in the Declaration of Cooperation (DoC) at the 10th (Extraordinary) OPEC and non-OPEC Ministerial Meeting on 12 April 2020.
The Conference highlighted the additional adjustments from Saudi Arabia (1 mb/d); the UAE (100 tb/d); Kuwait (80 tb/d) and Oman (10-15 tb/d) in June; the announcements of voluntary adjustments from several countries, such as Norway and Canada; as well as various oil company statements revising downward production plans and shutting in production, in view of the sudden and acute imbalance in the global oil markets.
In light of these facts, and in view of current fundamentals, all Member Countries agreed to the five key elements in reaching their unanimous decision, which will be recommended to non-OPEC Participating Countries.
They reconfirmed the existing arrangements under the April agreement; and subscribed to the concept of compensation by those countries who were unable to reach 100 per cent in May and June; with a willingness to accommodate it in July, August and September, in addition to their already agreed production adjustment for such months.
Members also agreed the option of extending the first phase of the production production adjustments pertaining in May and June by one further month. They recognized that the continuity of the current agreement is contingent on them fulfilling the mandatory cuts and compensation deal.
The Meeting called upon all major oil producers to contribute proportionally to the stabilization of the oil market, taking into consideration the substantial efforts made by the OPEC and non-OPEC Participating Countries of the DoC.