…as analyst says nothing wrong in Nigeria capping
25 July 2017, Sweetcrude, Lagos — The Organisation of Petroleum Exporting Countries, OPEC, has commended Nigeria for agreeing to cap production despite the urge to recover losses due to vandalism in the Niger Delta.
According to a release by the Group on Tuesday, OPEC said it “welcomed the flexibility” of Nigeria in the deal.
“The JMMC further welcomed the flexibility of Nigeria in this regard, which despite its commitment to recover its pre-crisis production level, voluntarily agreed to implement similar OPEC production adjustments as soon as its recovery reaches a sustainable production volume of 1.8mb/b,” the Group said.
On Monday during the Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC’s) meeting in Russia, said it took the decision to cap Nigeria’s production after the report submitted by the Joint OPEC-Non-OPEC Technical Committee (JTC).
According to the Group, although Nigeria was asked to cap after presenting its production recovery plans, prospect and challenges, it acknowledges the country’s upside limitations beyond its current production levels of 1.7 million barrels per day.
Nigeria agreed to cap once production reaches 1.8mb/d in coming weeks.
OPEC said once production stabilises, participating countries should further cooperate in a manner that contributes to stabilisation of the market.
The Group said despite criticism from the market, it had reviewed the JTC report and noted that oil market is making steady “significant progress” towards rebalancing.
“This assertion is based on the report of the JTC for the month of June 2017, which reviewed market developments and results of the first six months of progress made, according to OPEC’s 171st Ministerial Conference Decision and the respective voluntary adjustments in line with the Declaration of Cooperation,” it said.
Meanwhile, a Nigerian oil analyst has said that there was nothing wrong in Nigeria capping its production at 1.8 million barrels per day.
According to Energy Research Analyst, Dolapo Oni, it was best for Nigeria to accept capping due to its significant role in OPEC.
“Let’s not forget that Nigeria has been taking an active part in OPEC. Take, for instance, Kachikwu who was the Group’s past President and then Barkindo who the present Secretary-General. So, the country didn’t have a choice than to comply.”
Again he said that Nigeria is already producing 2.2mb/d.
“Nigeria itself announced that it is already producing 2.2m barrels per day. The 1.7mb/d announced was minus productions from some oil fields so if you still add those productions, Nigeria is at 2.2m already.”
Asking whether or not the country is not losing out on revenue, Oni said Nigeria “is doing fine”.
“Yes it capping can have its implications but Nigeria will be fine. Our budget is on $44.50 barrels and crude oil price is hovering around $45-$50. Don’t also forget that Nigeria’s foreign reserve just hit $30.5 because of increasing oil price. So, we are doing fine,” he said.