Voluntary commitment to the crude oil production adjustment
agreed by member countries of the Organisation of Petroleum Exporting Countries
(OPEC) and their associates led by the Russian Federation in December 2018 has
lowered Nigeria's daily crude oil production level to 1.685 million barrels per
day (mbd), THISDAY has learnt.
A document containing the production adjustment commitments
made by OPEC member countries Nigeria shows that Nigeria is voluntarily
stopping 53,000 barrels per day (bd) of her crude oil without condensate from
getting to the international market as part of the agreement reached at the
175th meeting of the OPEC Conference and fifth OPEC and non-OPEC ministerial
meeting, which was held in Vienna, Austria, last December.
In the document posted on the OPEC webpage, Nigeria declared
its reference oil production level to be 1.738mbd out of which 53,000bd would
be deducted, and 1.685mbd allowed into the market.
The country, it was also learnt, would be the largest
African producer in terms of volumes to contribute to the production cut
agreement considering that Angola which declared a reference production volume
of 1.528mbd will contribute 47,000bd to the agreement while Algeria with
1.057mbd production level will contribute 32,000bd.
Other African producers like Congo, Equatorial Guinea,
Gabon, South Sudan and Sudan will contribute 10,000bd, 4,000bd, 6,000bd,
3,000bd, and 2,000bd respectively.
Libya is exempted from the agreement on account of
geo-political issues.
Collectively, the document stated that OPEC member countries
will take out 812,000bd of oil while 10 non-OPEC countries will take out
383,000bd to bring the expected volume of oil to be taken out of the market
effective from January 2019 to 1.195mbd.
In December, the Minister of State for Petroleum Resources,
Dr. Ibe Kachikwu, told THISDAY that Nigeria could not be said to be comfortable
with its current oil production levels, but did not ask to be exempted from the
cut.
The minister initially disclosed that the country could
contribute up to 40,000bd to the cut, representing about 2.5 per cent of her
1.7mbd production level at that time.
“We didn’t ask for exemption; we wanted to make sure
everybody shared in the pain. If some happenstance occur, you are expected to
come back to ask for exemption.
“There was a lot of difficulties in getting everybody
together. You know the traditional difficulties in relationships between Saudi
Arabia and Iran. While everybody was willing to cut, some countries were not
willing to cut.
“It was more of the mechanics of how do you present it to
the market as opposed to the substance of the resolution itself and that was
what we broke yesterday and decided to take a break and come back with cool
heads today,” he said then.
He also explained that the output cut was as a matter of
fact in the best interest of Nigeria, adding that with larger oil volumes in
the market weakening prices, Nigeria would have found it difficult to implement
its budget for 2019.
Asked then if the cut had any impact on Nigeria’s budget
with regards to production volume, he said: “It has but has the potential of
saving your budget matter of fact, because if we don’t, prices were already
sliding..."
“If you look at the value of 40,000 barrels versus the gap
of earning $70 per barrel - I would imagine that prices would hover around $65
or more, and if we didn’t do that, the budget will be dead. This was a savings
mechanism to hold the money than holding the barrels. Technically, Nigeria is
not affected, it is a win for Nigeria.”
COURTESY THISDAY
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