The Organization of the Petroleum Exporting Countries (OPEC) tentatively agreed to an oil output cut yesterday but was waiting for a commitment from non-OPEC heavyweight Russia before deciding the exact volumes for a production reduction aimed at propping up crude prices; Reuters reported quoting two sources from the group.
An OPEC delegate was quoted to have announced that the meeting concluded without the cartel deciding on the figure of the output cut adding that the debate would continue with non-OPEC members on Friday (today).
Russian Energy Minister Alexander Novak was said to have flown home from Vienna earlier for talks with President Vladimir Putin in St Petersburg. Novak returns to the Austrian capital today for discussions among Saudi-led OPEC and the group’s allies.
The price of crude has fallen almost a third since October but U.S. President Donald Trump has demanded the OPEC make oil even cheaper by refraining from output cuts.
“We hope to conclude something by the end of the day tomorrow (Friday) … We have to get the non-OPEC countries on board,” Saudi Energy Minister Khalid al-Falih told reporters before the OPEC meeting started.
“If everybody is not willing to join and contribute equally, we will wait until they are,” he said.
Possible output cuts by OPEC and its allies ranged from 0.5-1.5 million barrels per day (bpd), and 1 million bpd was acceptable, the Saudi minister said.
Several delegates said after the four-and-half hour closed-door meeting that many countries including Iran, Libya and Venezuela were seeking exemptions from cuts.
The Minister of State for Petroleum Resources Dr. Ibe Kachikwu earlier before the meeting said the country would struggle to join the production cut.
Speaking in an interview with Bloomberg monitored by our reporter, the minister when asked whether Nigeria would be able to reduce production, said it would very difficult to do that, “but where we are now is that everybody must be seen to contribute. Obviously the smaller it is the more amenable it is to try and participate but the larger it is the more we will struggle to participate.”
I am keeping all fingers crossed, we have gotten exemptions three times understandably this time around I think there is a decision that everybody should be seen to chip in,” he said.
On the volume Nigeria might be asked to cut, he said, “we don’t know yet. Let’s go in there; I know it must be very small numbers,” adding that oil production stood at 1.73m b/d dropping from 2m b/d published in October by the oil ministry.
Nigeria’s oil production is projected to increase by 200,000 barrels per day with the coming on stream of the Egina oil field early 2019 but Kachikwu said this would have no impact if Nigeria joins the OPEC cut.
“The reality is that most of that is condensate. It is not pure crude. So, within the condensate philosophy we probably are still covered,” he said.
On the state of the country’s refineries the minister revealed that because negotiations with the prospective investors for the refineries’ repair was taking longer than expected, “The NNPC board in the last meeting took a position that by December 15th we should draw a ceiling whether we are going forward or not with the investors. We think that we would be able to go forward with some minor adjustments in terms of terms and by sometime first quarter of next year we should be able to see actual work begin at least with the initial ORBs.”