Nigeria’s oil output rises to 1.6mbpd

oil price fall

Nigeria’s crude oil production has climbed to 1.6 million barrels per day (mbpd), following repairs on some of the oil and gas installations damaged by militant groups in the Niger Delta, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, disclosed Thursday.

According to reports from Reuters and Bloomberg, Kachikwu said in Vienna, Austria, where oil ministers of the Organisation of Petroleum Exporting Countries (OPEC) unanimously appointed the former Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Mohammed Barkindo, as the cartel’s Secretary-General, that the country’s production had rebounded to this level after it fell to about 1.4mbpd in May due to a string of militant attacks and an accident on the ExxonMobil Qua Iboe export platform.

He also said despite continued attacks by militants in the restive Niger Delta, Nigeria was still on target to produce 2.3mbpd in 2016.

His disclosure also followed reports that OPEC, which appointed Barkindo, has again failed to agree on production cuts or freeze to shore up crude oil prices in the international market as disagreements between two Middle East rivals, Saudi Arabia and Iran, resurfaced.

Barkindo by his appointment becomes the second Nigerian, after former Minister of Petroleum Resources, Rilwanu Lukman, to serve as the oil cartel’s secretary-general.

Kachikwu was credited with playing a huge role in Barkindo’s emergence as the cartel’s secretary-general, as the minister was said to have worked hard behind the scenes at convincing OPEC’s influential members to allow a Nigerian to oversee the administration of OPEC’s headquarters in Vienna.

Similarly, Indonesia’s Energy Minister Sudirman Said disclosed in Vienna that Barkindo’s appointment was by consensus.

Barkindo will succeed outgoing Abdalla El-Badri who had been on the job for nine years. Barkindo was also the acting head of OPEC in 2006.

Seventy-six-year-old Libyan El-Badri was originally due to step down in 2012 after serving the maximum two terms but members were unable to agree on a replacement and his tenure was extended at successive meetings.

Barkindo beat rival nominees that included Indonesia’s Mahendra Siregar.

Meanwhile, OPEC yesterday failed to agree on a crude oil output policy, even though Saudi Arabia promised not to flood the oil market with extra oil, while Iran insisted on the right to raise its production steeply.

Reuters reported that tensions between the Sunni-led kingdom of Saudi Arabia and the Shi’ite Islamic Iran had been the highlights of several previous OPEC meetings, including in December 2015 when the group failed to agree on a formal output target for the first time in years.

Tensions, however, were doused Thursday as Saudi Arabia’s new Minister of Energy, Khalid al-Falih, showed Riyadh wanted to be more conciliatory and his Iranian peer Bijan Zanganeh kept his criticism of Riyadh to an unusual minimum.

Despite the setback, Saudi Arabia moved to soothe market fears that failure to reach any deal would prompt OPEC’s largest producer, already pumping near record highs, to raise production further to punish rivals and gain additional market share.

“We will be very gentle in our approach and make sure we don’t shock the market in any way,” Falih told reporters after the meeting.

“There is no reason to expect that Saudi Arabia is going to go on a flooding campaign,” Falih said when asked whether Saudi Arabia could add more barrels to the market.

The market has grown increasingly used to OPEC clashes over the past two years as political foes Riyadh and Tehran fight proxy wars in Syria and Yemen.

Saudi Arabia effectively frustrated the plans for a global production freeze – which was aimed at stabilising oil markets – in April.

It said then that it would join the deal, which would also have involved non-OPEC Russia, only if Iran agreed to freeze output.

Tehran has been the main stumbling block for OPEC to agree on output policy over the past year as the country boosted supplies despite calls from other members for a production freeze.

Tehran has argued that it should be allowed to raise production to levels seen before the imposition of now-ended Western sanctions over Iran’s nuclear programme.

Iranian oil minister said Tehran would not support any new collective output ceiling and wanted the debate to focus on individual country production quotas.

“Without country quotas, OPEC cannot control anything,” Zanganeh told reporters.

He insisted Tehran deserved a quota – based on historic output levels – of 14.5 per cent of OPEC’s overall production

OPEC is pumping 32.5mbpd, which would give Iran a quota of 4.7mbpd – well above its current output of 3.8 million, according to Tehran’s estimates, and 3.5 million, based on market estimates.

At its previous meeting in December 2015, OPEC effectively allowed its 13 members to pump at will.

As a result, prices crashed to $27 per barrel in January, their lowest in over a decade, but have since recovered to around $50 due to global supply outages.

Thursday, Brent prices eased 1.5 per cent to $49 per barrel.

Zanganeh made a few conciliatory remarks, saying he was happy with the meeting and received no signals from other producers that they planned to increase output.

Until December 2015, OPEC had a ceiling of 30mbpd – in place since December 2011, although it effectively abandoned individual production quotas years ago.