Nigeria Doubts OPEC Will Cut Production, As Report Predicts Militants Will Keep the Country's Output Low In 2017 Anyway

by Ship & Bunker News Team
Thursday August 18, 2016

Emmanuel Ibe Kachikwu, oil minister for Nigeria, has joined the ranks of critics who are convinced that the September meeting of the Organization of the Petroleum Countries (OPEC) will not result in an output cap deal; however, he thinks the congregation will be beneficial to his country nonetheless.

In Lagos to deliver a speech on Thursday, Kachikwu remarked, "Are we cutting volumes? I don't see that happening.

"Will that meeting help lift the price? Well yes, if we succeed in having conversations with Russia, the USA, and Mexico."

He went on to note that "If there is a handshake with individuals across the aisle, that would be the beginning," in reference to the possibility that individual OPEC members could agree to yet another attempt to agree on a freeze.

Nigeria's output has fallen to 1.56 million barrels per day (bpd) due to militant attacks; currently, the country's Qua Iboe, Bonny Light, Brass River, and Forcados oil streams are under force majeure, and militants led by the Niger Delta Avengers (NDA) have vowed to declare the region's independence on October 1 unless the Muhammadu Buhari government restructures the country.

Militants are hardly Nigeria's only headache: the plummet in oil prices has caused the country's currency to lose almost half its value against the dollar - the most among those of OPEC members and even more than Russia's ruble, which has declined 47 percent.

Nigeria's on-going problems have caused the International Energy Agency (IEA) to describe the militants' interruption of an estimated 750,000 bpd of oil as "severe" and notes that because payouts are just one of their many demands, "crude oil production stoppages are likely to continue until the Nigerian government and the NDA can reach a comprehensive agreement.

"EIA expects Nigerian oil production to remain depressed through 2017 as a result of militant attacks."

Kachikwu's opinion about the need for market stability has fluctuated in the past: when Iran was gearing up to return to the international market earlier this year, he said he would talk to OPEC to try and delay their return; he then said he would meet with Iranian officials to figure out how to stabilize oil prices; and then days later, he told reporters that "Nigeria doesn't have such a proposal."