Relief for Nigeria, as OPEC extends oil output freeze
Nigeria yesterday got special concession as the Organisation of Petroleum Exporting Countries (OPEC) reached the much-sought consensus to extend oil output freeze to keep prices high.
The OPEC has extended cuts in oil output by nine months until March 2018 to further battle a global glut of crude. This output freeze exemption would help Nigeria to retain about 78,000 barrels per day (bpd), which is what Africa’s top producer and counterpart, Angola, has presently given up to boost global prices.
Angola and Nigeria were Africa’s top oil producers before the renewed militancy in Niger Delta, which brought the country’s production down to as low as one million barrels per day, thereby forfeiting the coveted position to Angola.
With the country retaining 78,000 bpd and at global benchmark oil price of $52 a barrel, Nigeria is expected to save over $4.1 million (N1.2 billion) daily using the official exchange rate of N306 per dollar.
OPEC’s cuts have helped to push oil back above $50 a barrel this year, giving a fiscal boost to producers, many of which rely heavily on energy revenues.
Speaking at the 172nd meeting of the OPEC conference in Vienna yesterday, Saudi Arabia’s Minister of Energy, Industry and Mineral Resources, and President of the OPEC Conference, Khalid A. Al-Falih, disclosed that Nigeria and Libya would still be excluded from cuts, as their output remained curbed by unrest.
Al-Falih in a speech pasted on OPEC website, said that despite potential volatility, OPEC expects the situation to continue improving, assisted by a more robust global economy and higher Gross Domestic Product (GDP) growth in 2017.
According to him, the joint ministerial monitoring committee and the joint technical committee were created to effectively implement the accords, and both have helped to deliver concrete results, leading to the return of confidence and positive market sentiment.
Nigeria’s Minister of State for Petroleum, Ibe Kachikwu, had predicted before the meeting that the country would get an extension.
Kachikwu had said that the country is not opposed to joining OPEC production cuts but that would only happen when the country is back to full production.