The Organisation of Petroleum Exporting Countries and 10 non-member countries on Thursday agreed to extend cuts in oil production by nine months to March 2018 in a bid to further stem the global glut of crude in the market and prop up prices.
However, the deal failed to impress the market as the global oil benchmark, Brent crude, fell by 4.2 per cent or $2.27 to $51.69 per barrel as of 7:20pm Nigerian time.
OPEC members and non-OPEC producers, including Russia, reached a deal in December to cut output by 1.8 million barrels per day for six months from January 1, 2017.
But Nigeria and Libya were exempted from the cuts because their production had suffered disruptions on the back of unrest and militant attacks.
At OPEC’s 172nd meeting in Vienna on Thursday, member countries and 10 participating non-OPEC producing countries underscored the importance of continuing efforts to help stabilise the oil market in the interests of all oil producers and consumers.
“In this regard, the aforementioned non-OPEC countries decided to extend their production adjustments, which originally started January 1, 2017, for a further period of nine months, beginning July 1, 2017,” the group said in a statement.
Nigeria’s Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said in an interview with Bloomberg TV ahead of the meeting that the country was not opposed to joining the production cuts in a bid to prop up oil prices.
“Our numbers don’t justify us joining the pack yet. But, quite frankly, when we do, the pressure is going to get on for us to join the cut team. And Nigeria is not averse to that because I think everybody needs to make the necessary sacrifice to help the price stability on a worldwide basis,” he said.
The minister said the nation’s oil production was still hovering around 1.5 million barrels per day, down from around 2.2 million bpd, as a lot of the pipelines affected by militant attacks had yet to be repaired.
Kachikwu said, “Forcados is beginning to load but the reality is that those are test loadings. We still need to repair a lot of the secondary infrastructure that were damaged by militancy. It will take us about six months to get there.
“But my projection is that within the six to nine months window, all things being equal, militancy remaining calm and the investment that are required being urgently done to repair the existing pipelines, we should get to the sort of figure that we had before.”
The Forcados export terminal was shut down in February 2016 following militant attacks and Shell Petroleum Development Company of Nigeria declared a force majeure on exports of the grade.
While the force majeure remained in place, the terminal was reopened in October but suffered another attack by the militants.
According to the Nigerian National Petroleum Corporation, at the Forcados terminal alone, about 300,000 barrels of oil per day have been shut-in following the declaration of the force majeure.
Saudi Energy Minister, Khalid al-Falih, was qouted by Reuters as saying that Nigeria and Libya would still be excluded from cuts as their output remained curbed by unrest.