Nigeria’s oil exports offsets OPEC’s cut deal

Fresh data compiled by The Daily Times has shown that rising oil production exports by Nigeria has offset improved compliance in the cut deal by OPEC and non-OPEC.

According to data, OPEC oil output rose in May, the first monthly increase this year.

Both Nigeria and Libya were exempted from making cuts due to political instability and militants’ attacks on production which disrupted oil outputs from the countries.

A drop in output in Angola and Iraq and continued high compliance from Gulf producers, Saudi Arabia and Kuwait, had lifted OPEC’s adherence with the supply cut deal to 95 percent from 90 percent in April.

OPEC pledged to reduce output by about 1.2 million barrels per day (bpd) for six months from January 1, 2018 as part of a deal with Russia and other non-members.

Since the OPEC and non-OPEC deal, oil prices rose, however, rising supply by outside producers like the U. S, has kept prices below the $60 a barrel.

Again, sustained output rise from Nigeria and Libya, now pose further challenges.

To provide additional support for prices, the producers decided at a meeting last week to prolong the deal until
March 2018, which Nigeria and Libya again, were exempted.

However, data showed that both countries have started to recover from the shutdown in May, lifting overall OPEC output by 250,000 bpd to 32.22 million bpd.

The biggest increase came from Nigeria, where the Forcados production stream began loading cargoes for export.

The Forcados pipeline had been mostly shut since it was bombed by militants in February 2016.

In Libya, the state oil firm said output had reached 827,000 bpd on Wednesday, around levels last seen in 2014. But production is still half the 1.60 million bpd Libya pumped before the 2011 civil war.

While the exempt nations pumped more, those bound by output targets boosted compliance.

Adherence by OPEC with the deal has been higher than in the past, reaching a record according to the International Energy Agency and other analysts.

In May, Nigeria’s crude oil production rose by 274,000 barrels per day in April, according to data obtained from the Organisation of Petroleum Exporting Countries, OPEC.

OPEC said the increase is the biggest among countries within the oil producers’ group.

According to OPEC’s latest Monthly Oil Market Report for May, Nigeria’s output was put at 1.484 million bpd for April, from 1.21 million bpd in March, which was based on direct communication.

Meanwhile, Angola saw its oil output decrease to 1.651 million bpd in April, from 1.652 million bpd in the previous month.

But the country still retained its status as Africa’s top oil producer, after taking over from Nigeria recently.

The report showed that Saudi Arabia, the biggest producer in the group, recorded the second largest increase in April as it produced 9.946 million bpd, after recording a slide from 9.9 million bpd in March.

Kuwait, on its part, saw its production output rise by 10,000 bpd to 2.710 million bpd.

The United Arab Emirates’ production increased by 15,000 bpd to 2.988 million bpd in April.
OPEC crude oil production decreased by 18,000 bpd, from the previous month to average 31.73 million bpd in April, sources said.

In the report, the oil producers’ group noted that “Crude oil production declined in the UAE, Libya, Iraq and Iran, but increased in Angola and Saudi Arabia.”

OPEC also raised its forecast for oil supply growth from non-members in 2017 but kept its outlook for global crude demand unchanged at 96.4 million bpd.

The cartel is billed to meet in Vienna later this month, to discuss possible extension of output cut.

OPEC announced a production target of 32.50 million bpd at its November 30 meeting, which was based on low figures for Libya and Nigeria and included Indonesia, which has since left.

The Libyan and Nigerian increases mean OPEC output in May averaged 32.22 million bpd, about 470,000 bpd above its supply target, adjusted to remove Indonesia and not including Equatorial Guinea.