Will Nigeria be forced to join the OPEC production cut?
Nigeria could lose its exempt status in the OPEC oil production cut deal, as it restores its daily output to levels last seen before militant attacks on infrastructure in the Niger Delta began.
For the time being, this seems to be little more than speculation coming from an oil industry insider quoted by Nigerian Vanguard, who suggested that other members of the cartel may pressure the West African country – and second-biggest oil exporter on the continent – to join the cutting efforts.
“Nigeria appears well on the way to full restoration of its output that could see it pressured by its fellow OPEC members to end its exemption from the production agreement,” the source said.
Separately, the group managing director of the Nigerian National Oil Corporation said that OPEC is monitoring Nigeria and Libya, signaling that the exemption is not irreversible. The two countries and Iran have been a drag on oil prices, as all three are actively increasing their oil output, casting doubt on the effect of the other members’ cutting efforts.
At the moment, Nigeria is pumping about 1.8 million barrels daily, after efforts from the federal government to restore peace in the oil-rich Delta started bearing fruit. Militant attacks have become much less frequent than last year as the government intensified its talks with Delta communities.
Last month, Acting President Yemi Osinbajo announced a $20-billion investment plan for the region, focused on the development of a so-called gas industrial park, aiming to turn the Delta into a regional gas hub. Shell, one of the biggest field operators in Nigeria, separately committed $1 billion to the Delta.
Still, in February, Nigerian Oil Minister Ibe Kachikwu announced between $50 billion and $100 billion in lost oil revenues due to the series of militant attacks on oil pipelines and related facilities in the Niger River Delta. Though the figures were considered by some to be highly inflated, the revenue loss argument is a legitimate one for Nigeria if OPEC tries to make it start curbing its output.
By Irina Slav for Oilprice.com