Minister of State (Petroleum) Ibe Kachikwu yesterday hinted of plans by the Organisation of Petroleum Exporting Countries (OPEC) to impose some kind of “soft” targets on Nigeria and Libya on the basis of their average production this year.
He was quoted by Financial Times as saying on the sidelines of the ongoing OPEC meeting in Vienna, Austria that OPEC was discussing “soft targets” of around 1.8 million bpd for Nigeria and 1 million bpd for Libya, and talks continued on how to phrase those numbers as “indicative” and not include them as hard targets in the final OPEC statement.
Iran’s Oil Minister Bijan Zanganeh said OPEC is bringing Libya and Nigeria- the exempt members – into the fold with contributions to the efforts to erase the oversupply. He said the two African producers had agreed to cap their production at a collective level of less than 2.8 million bpd.
A delegate told Reuters that OPEC talks ended in Vienna with an agreement to extend the production cut deal through the end of 2018.
Going into the meeting, OPEC was expected to review the production numbers and targets of Libya and Nigeria, but, according to sources and analysts, it was uncertain whether the cartel would impose quotas or caps on the two African producers due to the still-tentative recovery and possible return of sudden outages due to militancy.
Still, some kind of ‘loose’ or ‘soft’ targets were being aired as a possible outcome.
Even though Libya and Nigeria have higher production targets than the recent highs of their production at 1 million bpd and 1.8 million bpd, they face security, technical, and financial constraints in growing production much higher.
Still, the fact that the two African countries agreed to cap at recent highs, not at the higher production targets, is a significant sign that they have been asked or persuaded to contribute to the deal, at least in some form.
OPEC and its partners, including Russia, agreed to extend oil-production cuts to the end of 2018 and included Libya and Nigeria in the deal for the first time.
Iraq’s Oil Minister Jabbar Al-Luaibi confirmed the decision after a day of talks that reflected a rare consensus between members of the Organisation of Petroleum Exporting Countries and its allies. All agreed that the market is moving in the right direction, but is not yet balanced.