The growing stability in the global oil market may work to Nigeria’s advantage, as the Joint Organisation of Petroleum Exporting Countries, OPEC, and non-OPEC Ministerial Monitoring Committee, JMMC, on Friday extended the exemption granted the country over the output cut imposed on member countries in January 2017.
At its meeting in Vienna, Austria, the committee upheld Nigeria’s position that the exemption, which was extended by another six months last May, should be sustained until the country’s oil production stabilizes.
The extension of the exemption period means more revenue earnings from oil exports by Nigeria, as the country would be able to export all the oil it produces as oil prices hover around $57 a barrel.
The Minister of State for Petroleum Resources, Ibe Kachikwu, said recently the country’s daily production capacity has since grown close to an average of 1.8 million barrels per day.
At the meeting in Vienna, Mr. Kachikwu, who led the Nigerian delegation, had argued that although Nigeria was making considerable progress since October 2016 in its production recovery efforts, it was not enough as full stability had not been attained.
“Although Nigeria’s oil production hit 1.802 million barrels per day (bpd) in the month of August, that was not enough justification for a call by some countries for Nigeria to be brought back into the fold,” Mr. Kachikwu pointed out.
As one of the older OPEC members that has continued to work for the good of the group and its member countries, Mr. Kachikwu said, Nigeria was bound by whatever agreements and resolutions collectively made by OPEC, including the need to cap its oil production when it has stabilized at 1.8 million bpd.
He also said that although Nigeria was not a member of the five nation JMMC, the country was in support of and had confidence in the work of the committee to stabilize the market.
The report of the Monitoring Committee for August 2017 showed OPEC and participating non-OPEC producing countries recorded the highest compliance level ever since the agreement came into effect in January 2017, with voluntary adjustments in production attaining over 116 percent level.
The JMMC was set up following OPEC’s 171st Ministerial Conference on November 30, 2016.
On December 10, 2016, the group further declared to cooperate with non-OPEC oil producing countries to accelerate the stabilization of the global oil market through voluntary adjustments in total production of around 1.8 million barrels per day.
The initial production cut agreement, which came into effect January 1, 2017, was for six months. The second joint OPEC-Non-OPEC Producing Countries’ Ministerial meeting on May 25, 2017, decided to extend the voluntary production adjustments for another nine months effective July 1, 2017.
At its fifth meeting on Friday, the JMMC welcomed the participation of Iraq, Libya, and Nigeria, and the reaffirmation of their commitment to work closely with other participating producing countries to ensure the success of the Declaration of Cooperation.
The President of the OPEC Conference, Khalid Al-Falih, who is also the Saudi Arabian Minister of Energy, Industry, and Mineral Resources, expressed his solidarity with the JMMC, reiterated the commitment of his country to the success of the agreement.
Although he cautioned against complacency, Mr. Al-Falih reaffirmed the need for additional work by under-performing participating countries to raise their levels of compliance to 100 percent.
He said the level of compliance in August 2017 underscores the commitment of participating producing countries to cooperate towards the rebalancing of the market.
Noting recent market developments, the committee said it was confident that the oil market was moving in the right direction towards the objectives of the Declaration of Cooperation.
Recent market inventory confirmed global oil demand growth in 2017 was now better than expected, with 2018 world oil demand anticipated to be robust.
“Commercial oil stocks in the Organization of Economic Cooperation and Development, OECD fell further in August and the difference to the latest five-year average has been reduced by 168 million barrels since the beginning of this year,” the OPEC Secretariat report said.
The report, however, noted that another 170 million barrels of stock overhang remained to be depleted.