Following the destruction of several oil and gas infrastructures by militants leading to unrest and economy sabotage, Nigeria’s daily oil output still hovers around 1.5 million barrels, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu has revealed.
The New Diplomat gathered this in an interview Kachikwu had with Bloomberg as he reacted to the likely thrust of meeting of the Organisation of the Petroleum Exporting Countries, OPEC, in Vienna, Austria.
Kachikwu said Nigeria was still suffering the consequences of petroleum pipeline vandalism, but stated that the nation was in support of a nine-month extension of the OPEC production cut, which is on the agenda at the meeting in Vienna.
Nigeria’s current output of about 1.5 million barrels per day, mbd, is a far cry from a peak of 2.6mbd and the 2.2mbd the country has produced in the last few years.
Ahead of the Vienna meeting, oil market analysts and industry experts had expect the group to extend the agreement it reached at last November’s meeting, trimming output by about 1.8 million barrels a day.
The agreement, which got the backing of non-OPEC oil producers, including Russia, brought OPEC’s production down to32.5 million barrels per day.
Russia and some other non-OPEC producers would also be part of the Vienna meeting.
Analysts polled by Bloomberg agreed that the OPEC ministers will, at the meeting, prolong the curbs, but they were divided on whether the extension will last for six or nine months and were also at odds over the probability of the cuts rebalancing the market.
“They don’t have much of a choice other than to extend the cuts,” Kim Brady, senior managing director at SOLIC Capital in Evanston, Illinois, said. “They have said they will do whatever needs to be done to balance the market. They haven’t quite achieved that yet.”
Among OPEC members, Saudi Arabia, Nigeria, Iran, Qatar, Venezuela and Kuwait all favour an extension of the cut.
Saudi Arabia and Russia, the world’s top two oil producers, at a meeting few days ago agreed on the need to extend output cuts for nine months until March 2018 to erode a glut. That would be longer than the optional six-month extension earlier proposed by producers.
“This statement shows the commitment by OPEC and major non-OPEC oil producers to bringing stability to the oil market, in which is essential to have the security of supply in coming years,” a source at the meeting said.
Iran is also in favour of a proposal to extend the OPEC and non-OPEC supply cut for nine months, describing it as a positive idea.
Kuwait, a Gulf producer usually aligned with the Saudi OPEC view, said on Tuesday it supported the proposal.
Qatar’s energy minister said the country was optimistic that extending the global oil supply cut beyond June would improve market stability, and that there was merit in continuing the curbs through March 2018.
“We are optimistic that the extension of the agreement to the second half of this year will improve market stability, due to the higher expected demand in Q3 and Q4. This is further supported by the fact that the world economic situation is progressively improving,” Mohammad al-Sada said in a statement.
“We also see merits of extending the agreement further to the first quarter of 2018, when the demand is seasonally lower.”
Sada said a number of oil producers had shown support in recent days for extending the agreement, and that the process of rebalancing supply and demand “is finally gaining momentum” after almost three years of gains in oil inventories.