OPEC wants Nigeria to keep oil output at 400,000 barrels below budget benchmark

The Organisation of Petroleum Exporting Countries (OPEC) wants Nigeria to keep its oil output level at 1.8 million barrels per day.

This is effectively 400,000 barrels less than the country’s expected 2.2 million barrels per day as benchmarked in the 2017 national budget.

This was disclosed after the Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) meeting in Russia on Monday, after a review of the joint technical committee (JTC).

The meeting was hosted by Alexander Novak, the Russian energy minister, and had Mohammad Barkindo, the OPEC secretary-general and members of the JMMC in attendance.

According to OPEC secretariat, the JMMC, having reviewed the report of the JTC, including the presentations made by the representatives of Libya and Nigeria on their production recovery plans, prospects, and challenges, acknowledges the upside limitations of both countries beyond their current production levels.

“Once their production levels stabilize, participating producing countries should further cooperate in a manner that contributes to the stabilization of the market,” OPEC secretariat said via a statement.

“The JMMC will continue to monitor and recommend further actions including the holding of an extraordinary conference of the 24 producing countries if needed.

“The JMMC further welcomed the flexibility of Nigeria in this regard, which despite its commitment to recover its pre-crisis production level, voluntarily agreed to implement similar OPEC production adjustments as soon as its recovery reaches a sustainable production volume of 1.8 mb/d.”

The committee reviewed the JTC report and noted that the oil market is making steady and significant progress towards rebalancing.

The continued strengthening of the global recovery is underway, with stability in the oil market remaining a key determinant, with market volatility staying lower in recent weeks and improvements in investment flows.

“According to the JTC report, there are several positive indicators going forward.  Oil demand is expected to increase significantly in the 2H17 compared to 1H17, with the growth reaching a level of 2 mb/d, which should sustain the inventory draws.”

The secretariat added that the “participating OPEC and Non-OPEC producing countries achieved a conformity level of 98% in June 2017,” less than the over 100 percent recorded in previous months.

The JMMC noted that despite the high level of conformity at the aggregate level, there is still room for improvement by some participating producing countries, and demanded that all participating producing countries must promptly reach full conformity.

Consequently, the JMMC had serious discussions with those countries and will continue to engage with all participating countries individually, in particular those that are yet to achieve 100% conformity for the remaining period of the declaration of cooperation.

The fifth meeting of the JMMC is scheduled to take place in September 2017, or earlier if deem necessary.