Nigeria exempted from OPEC cut

Hauwa Ali in Vienna, Austria

OPEC representatives have reached a deal in Vienna, Austria to cut oil production, after months trying to lift sagging prices.

However, Nigeria and Libya were exempted from the cut, while Indonesia suspended its membership after refusing to agree to the deal, thus is not reflected in the projection.

Delegates from the Organization of the Petroleum Exporting Countries agreed to cut production by 1.2 million barrels a day to 32.5 million, effective from Jan. 1, 2017, representing about 1% of global production

This is happening for the first time since OPEC began oil cut talks in 2008 that an agreement of this nature was reached to reduce supply despite several attempts.

OPEC ministers confirmed it had secured a cut in its oil production from 33.8 million barrels a day to 32.5 million in an effort to prop up prices.

Brent crude prices were up over 8 percent as the deal was announced, trading around $50 a barrel

Qatar’s Minister of Energy and Industry, Dr Mohammed Al-Sada, who is also the President of the OPEC conference made the announcement in a press briefing at the end of the 171 meeting of the Conference of the OPEC on Wednesday in Vienna.

This agreement was reached following extensive consultations and understanding reached with key non-OPEC countries, including the Russian Federation that they contribute by a reduction of 600,000 barrels per day.

The duration of this agreement is six months, extended for another six months to take account prevailing market conditions and prospects.

We also agreed to establish a Ministerial Monitoring Committee composed of Algeria, Kuwait, Venezuela and two participating non-OPEC countries, chaired by Kuwait and assisted by the OPEC secretariat.

“They are expected to closely monitor the implementation of and compliance with this agreement and report to the conference,” Al-Sada said.

He said the next Ordinary meeting would convene in Vienna, Austria on May 25, 2017 to review the implementation of the agreement.

 

A breakdown of the agreed oil production adjustment by the OPEC Secreteriat after the briefing showed that Saudi Arabia is expected to make the largest contribution by cutting production by 486,000 b/d.

Also, Algeria is expected to reduce its output per day by 50,000, Angola, 87,000, Ecuador, 26,000, Gabon, 9,000, Iran, 90,000, Iraq, 210,000, Kuwait, 131,000, Qatar, 30,000, UAE, 139,000 and Venezuela by 95,000.

Meanwhile Nigeria’s Minister of State for Petroleum, Mr Emmanuel Kachikwu said vandalism of crude oil pipelines and militancy activities in the Niger-Delta was the reason Nigeria was exempted.

“We are grateful that the OPEC was understanding of the case we made about why Nigeria needs to be exempted from this cut.

“This gives us time to get our house in other by resolving the Niger-Delta crises. Already production in Nigeria is up to 1.9 million per barrel and we expect to get it up to 2.2 million but not flood the market. “We all have the responsibility to contribute to the tightness of this market,” he said.

Kachikwu said the cut will rebalance the price of crude oil globally and projected that oil prices will go up to 60 dollars per barrel from the 50 dollars it rose to after the deal was announced.