OPEC Reduces Nigeria’s Quota to 1.4mbpd

• OPEC Reduces Nigeria’s Quota to 1.4mbpd

The Organisation of the Petroleum Exporting Countries (OPEC) decision to reduce crude oil production by 10 million barrels per day in May and June after Russia and Saudi Arabia led 14 members were able to reach agreement on Thursday, will see Nigeria’s crude oil production dropping further to around 1.4 million, according to one of the delegates.

The delegate had said Saudi Arabia and Russia would lower crude oil production to 8.5 million barrels per day each while other members would have to cut production by 23 percent.

This means Nigeria’s production would drop from 1.83 million barrels per day pumped in October last year to 1.4mbpd.

“This does not look like a good deal for Nigeria, We should have negotiated for a 23 percent cut on production of 2.3 million bpd not 1.83 million bpd,” Charles Akinbobola, energy analyst at Lagos based Sofidam Capital said.

Akinbobola explained that this would impact the economy negatively considering the imperative of the commodity to the economy.

“You can produce condensate which is not part of the OPEC commitments. We are focusing our production to more gas-based reservoirs so that we can continue to grow our production while maintaining balance in the market,” Group Managing Director, Nigerian National Petroleum Corporation, Mele Kyari was quoted as saying on the sidelines at an event when questioned about cartel commitment.

The Brent crude oil, against which Nigerian oil is priced, declined from $36 per barrel on Thursday to $31.77 per barrel on Friday as the agreement failed to lift the oil market.

Analysts said the G20 energy ministers meeting today would have to cut production or OPEC plus would need to announce an additional production cut to lift prices considering the size of the decline in demand.