If delegates to Thursday’s meeting of the Organization of Petroleum Exporting Countries (OPEC) have their way, Nigeria and Libya would join in proposed crude oil production cuts.
The move is targeted at warding off growing supply glut that has forced down prices of the product.
The production cuts deal, which began on January 1, 2017, indicated that OPEC countries and 10 non-OPEC producers led by Russia would cut a combined 1.8 million barrels per day in supplies to tackle oversupply and prop up prices.
It was later extended till the end of 2018.
Nigeria and Libya were however exempted from the cuts on account of internal unrest that targeted oil infrastructure.
OPEC’s main advisory board had said last month that there was need to cut oil production to avoid an oversupplied market in 2019.
Earlier in November, OPEC secretariat said in a report that the group needed to pump 1.36 million barrels per day less next year than it did in October to avoid flooding the oil market in 2019.
According to delegates attending the OPEC meeting in Vienna who spoke to S&P Global Platts on Wednesday, they would be asking Nigeria and Libya to accept a production cut quota if OPEC could reach a new supply accord.
“We are hopeful that they will come around this time and understand that everyone has to cut together,” an OPEC delegate was quoted as saying.
According to the delegate, both countries had made significant improvements to their production since the current deal went into force in January 2017, and it was time for them to “contribute.”
Production from Libya has surged by 520,000 bpd, or more than double, from the October 2016 baseline on which the 1.8 million bpd cuts were based, while Nigerian output has risen by 210,000 bpd, or 13 per cent, according to S&P Global Platts OPEC survey data, though both have had volatile swings.
It would be recalled that the Saudi Energy Ministerx Khalid al-Falih recently visited Nigeria and Libya to press the two countries on the exemptions, though no public commitments have been announced.
It is however yet to be seen if Nigeria would cave in to the pressure as cutting output could be tricky, as its oil production is set to climb to around 2.2 million bpd by early 2019, with the startup of the giant 200,000 bpd Egina field due in the coming weeks.
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