Nigeria’s oil production, which hit 2.05 million barrels per day (mbpd) in June may suffer further decline that could threaten the 2017 budget as the Organisation of Petroleum Exporting Countries (OPEC) has invited Nigeria for briefing on its production plan.
Minister of Petroleum Resources, Mr. Ibe Kachikwu, was invited to attend the OPEC and non-OPEC Ministerial Monitoring Committee meeting in Russia on July 24, fuelling speculations that Nigeria may not likely be exempted from further production cuts after the meeting.
The Federal Government had predicated its 2017 budget on $44.50 per barrel and a 2.2 million daily oil production target.
With the steady rise in crude oil price to $47.04 per barrel as against the country’s oil price benchmark of $44.50, Nigeria seems to be a little comfortable if prices remain stable.
Recall that OPEC and 10 non-member countries had on May 25, at its 172nd meeting in Vienna, agreed to extend cuts in oil production by nine months to March 2018 in a bid to further stem the global glut of crude in the market and prop up prices.
OPEC members and non-OPEC producers, including Russia, reached a deal last December to cut output by 1.8 million barrels per day for six months from January 1, 2017. But Nigeria and Libya were exempted from the cuts because their production had suffered disruptions on the back of unrest and militant attacks.
Regrettably, output from OPEC hit a 2017 high as OPEC June at 280,000bpd to 32.72 million bpd, despite the group’s pledge to hold back output.
Half of the increase came from Libya and Nigeria, which were exempted from making cuts under the deal agreed between OPEC and its allies. Libya and Nigeria were said to have added 130,000 bpd last month.
Meanwhile, Kuwait Oil Minister, Essam al-Marzouq, yesterday, at the World Petroleum Congress (WPC) in Istanbul, Turkey, said Kachikwu will be unable to attend the OPEC and non-OPEC Ministerial Monitoring Committee meeting in Russia.
“We extended the invitation but unfortunately there is a previous commitment for the Nigerian oil minister as I heard today,” he told reporters when asked whether Nigeria will join the committee meeting set for July 24 in St. Petersburg.
Marzouq added that Nigeria will probably be asked to join the technical committee’s meeting, which comes before the ministerial meeting to talk about its oil production plans.