Relief as OPEC extends Nigeria’s output cut exemption

Relief as OPEC extends Nigeria's output cut exemption

A relief of sort seems to have come the way of Nigeria, as the Organisation of Petroleum Exporting Countries (OPEC), despite a relative rise in price of crude oil at the international market, has expanded the country’s exclusion from crude oil output cut till further notice.

Though the extension was to last for six months, there are indications that the affected countries may continue to enjoy the benefits until there are strong evidence that they are on the path of recovery from their lost production quotas, it has been learnt.

The cheering news was confirmed on Monday in Abuja, by the OPEC Secretary General Dr. Muhamad Barkindo, during a ceremony marking his first official visit to Nigeria since assuming office in August 2016 in Vienna.

He said there was no pressure on Nigeria and Libya over the exemption as it could only be reviewed as some progress are made towards having full control of the market forces.

Barkindo, who is a former Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) expressed optimism that the agreement reached between OPEC and non-OPEC countries, including Russia, is being periodically fine tuned with some positive signs showing that it would be sustained .

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According to him, the glut in the oil market, which began in the summer of 2014 with oil price crashing from $110 to $29 early 2016 was the worst period in the history of the cartel.

He said: “The OPEC ministers in their own wisdom decided for the first time since 2008, to cap production to a range of 32.5 million to 33 million barrels per day and secondly also directed us to begin to work earnestly with non-OPEC to bring them on board in order for them also to contribute their own quota to the restoration of stability to the market.

“The consideration was that our member countries particularly Nigeria, Libya and Iran that have been facing severe challenges in their domestic industries should not be expected to participate in this new supply arrangement.

“Nigeria at a point lost over 800,000 barrels, Libya lost nearly 1.5 million barrels per day and Iran saw its export shrinking by nearly one million barrels per day. And so the council of ministers decided that these three countries should be given special considerations in the implementation of the Algiers Accord.

“And when we met in Vienna on 30th November to begin the process of implementations by agreeing on the ceiling 32.5m we reaffirmed the positions of these three countries”.

Barkindo also commended the persistent role played by the Nigerian Minister of State Petroleum Resources, Dr. Ibe Kachikwu, in convincing OPEC members and non-OPEC members in reaching the agreement, saying such confirms Nigeria as a well respected member country of the organisation.

He said OPEC countries will continue to monitor the market and implementation of the agreement, adding that the group was optimistic that the price stability will hold.

On conformity level to the agreement, he put it at more than 90 per cent among OPEC members and about 80 per cent among non-OPEC members.

While thanking President Muhammadu Buhari and Kachikwu for pushing for his candidacy and election as OPEC scribe, he assured them that he would not fail Nigeria in his new assignment.

In his remarks, Kachikwu thanked Barkindo for assisting OPEC achieve the production cut agreement, which testified to the fact the Secretary has brought in a lot of innovations to the organisation.

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