Oil in Global Economy Series: Nigeria to resist production cuts as more time needed for recovery

Nigerian oil minister Emmanuel Kachikwu said in an interview with Financial Times that was published on Tuesday that the country will resist any pressure to curb its output as it clearly needs more time to recover after country’s production dipped sharply last year following militant attacks on Nigeria’s oil-rich delta. Nigeria and Libya re the two countries that received exemption from the OPEC agreement that was reached last November with an aim to reduce global supplies by 1.76 million barrels via production cuts and imposed ceilings. The overall production from OPEC increased this year, despite the agreement, largely due to increased production in Libya and Nigeria.

Two months ago after a ministerial committee meeting monitoring compliance with the deal, made up of officials from OPEC and those outside the cartel such as Russia said that Nigeria has voluntarily agreed to join the OPEC imitative of production curb and will put a cap on country’s production at 1.8 million barrels per day. But latest OPEC monthly report shows that Nigeria produced 1.861 million barrels per day in August.

Mr. Kachikwu is now suggesting that Nigeria should be given time until March 2018 to the very least to see whether the production stabiles or not. Nigeria is expecting pressure from other OPEC members at the cartel’s regular meeting in November this year, He also expressed his skepticism of initial OPEC oil price target of $60 per barrel in the wake of the deal. He said, “$60 is looking very, very tough right now if you look at the sort of numbers coming out from US shale….The earlier all of us get used to the fact [shale] is going to be there for a long time, the better”. He expects Brent crude to average around $55 per barrel next year.