OPEC: Nigeria, Libya know fate soon over oil exempt

By Ihesiulo Grace

6 September 2017

Business

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Abiodun Oyindamola, with Agency report
With the relative peace in the Niger Delta and some level of stability attained in oil production, the exemption granted to Nigeria by the Organisation of Petroleum Exporting Countries, OPEC, is due for review.
The cartel’s committee will on September 22 meet to review oil sector developments in Nigeria and Libya. The committee may recommend that both countries cap their oil production quotas.

Will Nigeria and Libya continue to enjoy their exemption from the oil production cut deal? Or, will the two members of the OPEC be asked to seal their production quotas? They are to know their fate soon.

Both countries were on November 30, last year, exempted from the oil production cut deal with non-OPEC countries. The implementation of the decision began on January 1, this year. Nigeria and Libya have been invited to participate in the producer group’s latest ministerial committee meeting scheduled for September 22.

The two countries have been invited to the meeting billed for Vienna, Austria for a review of the latest developments in their oil sectors, Kuwait’s OPEC Governor, Haitham al-Ghais told Al-Rai newspaper.

Going by the account of the Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, Nigeria’s oil production, including crude oil and condensates, is between 2.2 million and 2.3 million barrels per day (bpd). Condensates, according to him, accounts for about 300,000bpd to 400,000 bpd.

The latest S&P Global Platts OPEC survey in Bloomberg report said the Libyan output recovered to reach an average of 990,000 bpd in July, its highest level in three years up from 180,000 b/d in June.

This was before the closure of three fields, including the 300,000 bpd Sharara, 90,000bpd El-Fil and 10,000 bpd Hamada fields, shutting-in around 360,000 bpd of output since the middle of last month.

OPEC is expected to consult with Nigeria and Libya to identify their plans, Ghais said. The group will hold a technical committee meeting on September 20, looking at the continued effects of the United States (U.S.) shale oil on the global market and the impact of Hurricane Harvey.

Ghais said: “The amount of production affected by the hurricane is estimated at 700,000bpd, which may strengthen the status of the market.”

He added that U.S. production had increased by 500,000bpd so far this year, compared to last year’s.

The September 20 meeting will be followed by another meeting on September 22, where a committee overseeing the deal, composed of oil ministers from Kuwait, Russia, Venezuela, Algeria, Oman and Saudi Arabia.

According to Platts, Saudi Arabia and Russia are seeking to extend the deal for a further three months to June, to demonstrate their commitment to market management and dampen fears that the producers will return to a market-share battle as soon as the deal expires.

But there indications that Libya and Nigeria may be asked to cap their crude oil productions at the meeting.

The two African nations were invited to the committee meeting in St. Petersburg, Russia, on July 24, to discuss the stability of their production. Kuwait Oil Minister, Issam Almarzooq, hinted that the decision would be in an effort to help rebalance the oil market.

Almarzooq, the Chairman of the Committee monitoring the compliance of OPEC and non-OPEC suppliers with output cuts, confirmed this in an interview with a news agency in Istanbul, Turkey.

“We invited them to discuss the situation of their production. If they are able to stabilise their production at current levels, we will ask them to cap as soon as possible. We don’t need to wait until the November meeting to do that”, Almarzooq said, in reference OPEC’s upcoming meeting scheduled for November 30.