02-09-2017

Pressure for Nigeria to join OPEC cuts to rise as oil output reaches full capacity

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The clamor to include Nigeria in the OPEC output cuts is likely to grow louder, with the country’s oil minister, Emmanuel Kachikwu, saying that current oil production is close to full capacity.

Nigeria’s oil production, including crude oil and condensates, is currently at around 2.2 million to 2.3 million b/d, Kachikwu said Thursday in a podcast released by the oil ministry.

“Oil production of course has risen on the back of this stability and we have moved from an all-time low of 1.2 million b/d and today it’s roughly about 2.2-2.3 million b/d, of course that includes condensate,” he said.

Kachikwu did not mention Nigeria’s prospects of joining the OPEC output cuts in the podcast, but this comes as questions linger on Nigeria’s involvement in the OPEC cuts as its output has recovered close to full capacity.

This comes weeks ahead of the OPEC/non-OPEC Joint Committee Ministerial Meeting on the September 22 in Vienna, where the monitoring committee said it will be inviting representatives from Libya and Nigeria to explain their production outlooks.

The figure of around 2.2 million to 2.3 million b/d includes about 300,000 to 400,000 b/d of condensates, which implies that its current crude oil production is at the coveted 1.8 million b/d mark.

Previously, Kachikwu has said that Nigeria would agree to join the cut agreement once its crude oil production stabilizes at 1.8 million b/d,

This was also confirmed by Saudi Oil Minister Khalid al-Falih in July.

On the subject of OPEC, Kachikwu said that Nigeria will continue to play a proactive role in OPEC and is hopeful that with the efforts of Saudi Arabia, OPEC Secretary General Mohammad Barkindo and Russia, oil prices can move in the low $60s/b in the near future.

INDUSTRY REFORMS

Kachikwu linked the output rise to the increased investment in upstream operations by foreign producers on the back of relative calm in the Niger Delta region.

Output has, however, recovered gradually this year as militant attacks have fallen substantially since early January after the government stepped up peace talks with leaders and youths in the Niger Delta to end militancy in the region.

Apart from the curbing militancy in the region, Kachikwu said Nigeria’s decision to introduce a new mechanism for the funding of upstream projects owned jointly with foreign oil partners helped to stimulate investments in drilling and production activities that raised output.

Nigeria agreed to the funding arrangement with the partners — including Shell, ExxonMobil, Chevron, Eni and Total — that would see the country exit the system of contributing money to fund its average 57% equity in the ventures, known commonly as a cash call.

Source: Platts 

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