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The Nigerian National Petroleum Corporation has delayed publishing its future oil export plans as it negotiates with international oil companies and local players on how to cut output in line with a global deal on production curbs.
The official selling prices for Nigerian oil, usually issued in the second or third week of each month, had still not been issued on Monday, according to Reuters.
The production cut deal, agreed by the Organisation of Petroleum Exporting Countries and its allies, is due to go into effect on May 1.
OPEC, Russia and other allied producers agreed this month to cut their combined output by 9.7 million barrels per day, or each reducing their production by more than 20 per cent. The first round of cuts will run in May and June.
“The NNPC is working out the cuts for the international oil companies; that’s why the programme for June and the OSP for May is yet to come out,” a trading source was quoted as saying.
The NNPC, which has not issued any public notice of delays or output cuts, needs to discuss reductions with companies working in the country, including oil majors such as Royal Dutch Shell, ExxonMobil, Eni and Chevron.
Traders expect the May official selling prices to fall below April’s record lows published by the NNPC, according to Reuters.
Traders of Nigerian oil were quoted as saying that Nigeria, an OPEC member, had revised its May programmes for oil cargoes and would also have to lower its output in June based on the OPEC+ deal.
“May cargoes will get delayed and new June cargoes may be relatively few,” one of the sources said.
Brent crude, the benchmark against which Nigerian oil trades on the global market, fell to its lowest in two decades last week before staging a modest recovery.
The global benchmark fell by $1.65 to $19.79 per barrel as of 5:50pm Nigerian time on Monday, on concerns over scarce storage capacity, especially in the United States, and global economic doldrums from the coronavirus pandemic.
Traders said Nigeria’s key crude oil grade, Bonny Light, was heard to be offered at as low as dated Brent minus $5, compared to a premium of $3 in more normal market conditions.
Surging inventories, as demand for oil tumbled due to global measures to fight the coronavirus pandemic, have made it a challenge for some producers to find buyers for their oil.
At least 36 Nigerian crude cargoes are still available for export in April and May and the country has minimal domestic storage, according to Reuters.
Major markets, such as Europe and Asia, spurned West African crude in favour of oil from producers that lie closer to them, cutting down on shipping times amid the market uncertainty and reducing freight costs.
