Nigeria promises compliance as OPEC extends cut

…Kyari hinges nation’s revenue on oil prices, production
Nigeria, whose crude production exceeds its quota under an OPEC/non-OPEC supply accord, is working to improve its compliance, Head of the Nigerian Delegation to the meeting, Dr Folasade Yemi-Esan, said on Monday.

But Esan left open the possibility that Nigeria could receive a higher quota when OPEC ministers meet later in the day to decide the future of the 1.2 million barrels daily (b/d) supply cut agreement, which expired Sunday.

OPEC and its non-OPEC allies committed in December to 1.2 million b/d in supply cuts through the end of June. Key members of the coalition have endorsed a nine-month extension that will be considered at the meeting.

Despite the agreed cuts, Nigeria had been producing above its quota in a bid to finance the 2019 budget.

Besides, the newly appointed Group Managing Director of the Nigeria National Petroleum Corporation (NNPC), Mele Kyari, yesterday said crude oil pricing and volume of production are key factors in ensuring sustainable revenue generation for the country.

The new NNPC boss, who is Nigeria’s OPEC National Representative was represented at the meeting by Bala Wunti.

“Through the Declaration of Cooperation, greater stability is restored globally, Nigeria believes that having the right price and volume can support our aspiration and ensure a sustainable revenue generation.

“So a nine-month extension is the way to go considering the objective of the declaration, that is why Nigeria supports the initiative and is also grateful that big nations are committed to it,” Kyari added.

Amidst exceeding quota, Nigeria’s production remained below the 2.3mbpd target for the 2019 fiscal year as oil prices hovered around the $60 per barrel benchmark.

Agency reports showed that Nigeria and South Sudan could request looser production ceilings.

Nigeria had been exempt during the first two years of the OPEC/non-OPEC production cuts, due to the volatility of its output stemming from disruptions in the Niger Delta, only receiving a quota for the current round of cuts, which went into force in January.

“A higher quota is not the essence,” Esan said at a press conference held at the OPEC Ssecretariat. “If we wanted higher quotas, we would not have exited the exemption.”

Pressed on whether Nigeria would keep its output cap of 1.69 million b/d under the deal, she said: “We are working very hard to keep that ceiling, but if for any reasons the ceiling is increased, we will keep to whatever ceilings we get.”

Nigeria pumped 1.86 million b/d in May and 1.95 million b/d in April, according to Platts’ monthly survey of OPEC production.

Country officials have previously disputed production figures from some secondary sources used by OPEC to track compliance, including Platts, saying that some of the volumes include condensate, which is not covered under the quota.

But much of Nigeria’s recent surge comes from the start-up of the deepwater 200,000 b/d Egina field, which came online December 29. And official data from state-owned Nigerian National Petroleum Corp. show that the country’s oil and condensate production is averaging around 2.3 million b/d, with officials having previously pegged condensate output at about 400,000 b/d, meaning about 1.9 million b/d of production is crude.

“There are other existing projects that will increase production, as well, over the next six to 24 months,” a Nigerian delegate told Platts on condition of anonymity, conceding that other ministers may not be amenable to a request for a higher quota.

Esan, who is filling in as Nigeria’s OPEC representative since President Mohammed Buhari has yet to name a new cabinet, said some of Egina’s production could yet be classified as condensate.

“Not all wells are fully functional,” she said. “We are trying to define the composition of this field.”