OpeOluwani Akintayo 15 September 2017, Sweetcrude, Lagos – Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has confirmed that Nigeria is exempted from the Organisation of the Petroleum Exporting Countries, OPEC’s crude oil production cut till March next year.
According to him, Nigeria got its first exemption from the production cut for six months – January to June, this year – at the inception of the policy in January, and the second one for nine months – July to March next year – at the OPEC meeting earlier in May.
Kachikwu said in an interview that at the expiration of Nigeria’s crude oil-cut exemption in March, 2018, the country would still push for further exemption.
The minister, who appreciated OPEC’s understanding in exempting the country from the production cut, said that as at July Nigeria had agreed to cap once production reaches 1.8 million barrels a day.
He added that market stability was an issue. “So, the question is when do we join, but, I will recognise stability if I can consistently say that for at least six months, I’ve seen average daily productions that are within the umbrella of 1.8 million barrels.
“The market is still topsy-turvy; today, I think we are around 1.6 million barrels per day (bpd).
“A lot of days we are slightly above 1.8 million barrels because of the understanding with our Niger Delta brothers.
“OPEC has no intention of giving an extension, taking it back, but it shouldn’t take the butchering of my pipelines to get an exemption.
“I have obviously a mark of March, next year; if I need to draw it up to that point, I will.
“If my numbers are not showing stability (but if we are fine before then) and stability arises (but this is already September so March is really six months).
“It’s very unlikely that I can see stability that convinces me with certainty and predictability that I should exit the exemption between now and March,” he said.
The minister said that he wouldn’t do anything to jeopardise OPEC’s rules.
“We are going to be very transparent on this; I was the ex-OPEC President; we have the OPEC Secretary-General from Nigeria.
“So, my intent definitely cannot be to play games with this but at the same time we have to be very realistic.
“We are committed to the OPEC position; we are committed to the cut principles. We’ll do our best to align as soon as our colleagues begin to feel that we are stable enough.
“I, however, found working with Russia, working with Saudi Arabia and all the other OPEC members that they usually will be very honest in terms of looking at the data.
“They have their own secondary sources to determine what it is that we produce and they are able to see what the numbers are,” he said.
He said the nation was undergoing massive problems in terms of liquidity, income, predictability and financing of projects.
“This period enables us to get our act together and make sure all the things we need to do in the Niger Delta are done.
“People have a much firmer promise to remain stable, not attack our pipelines and we can predict our volumes day-to-day much more determinedly.
“We are seeing incidences of that begin to return but we still have these flip-flops,” Kachikwu said.
He reiterated that Nigeria was given the 1.8 million bpd maximum production, adding that technically, it would not change.
“We won’t be cutting from the 1.8 million but bear in mind that our production is 2.2 million barrels even though we’ve now moved condensates out of it.
“So, the exemption was that we’ll not exceed 1.8 million so anything above 1.8 million we’ll cut, not including condensates.
“When we finish repairing our infrastructure, our capacity is going to be huge.
“I think this country has potential capability to raise production to 2.5 million barrels so there will be quite some sacrifices that we will have to make to align ourselves with everybody.
“But capacity is one thing and ability to build on this capacity is another thing, so it’s still work in progress.”
SweetcrudeReports had reported that OPEC had freed Nigeria from fixing quotas in the ongoing OPEC/Non-OPEC crude oil cap deal.
Although Nigeria did not issue an official statement on its exemption following widely spread report that it had accepted to cap however, the information was ‘leaked’ by Chief Executive Officer of Russia’s top oil producer, Rosneft, Igor Sechin, during a chat with Russian news agency, TASS on Sunday.
“You know that not all even OPEC members are participating, Nigeria has been freed from fixing quotas. It should be taken into account as well, similar to the state of shale production, financial instruments that affect the price,” he said.
Report written with additional information from NAN