Nigeria has written the Organisation of Petroleum Exporting Countries (OPEC), requesting a higher production quota under the OPEC+ accord.
This comes as oil prices rose modestly on Tuesday, as concerns about the global consumption outlook counterbalanced the struggle by big OPEC producers to pump enough supply to meet growing demand.
Both benchmarks were at one point up by $1 per barrel, but Brent crude pared gains and was up just 32 cents to $74.24 a barrel after falling by almost two per cent on Monday.
The Minister of State, Petroleum Resources, Chief Timipre Sylva, while speaking on the sidelines of the Gastech 2021 conference in Dubai, confirmed Nigeria’s request and said the technical problems that had hampered the country’s output would soon be resolved.
He said the country’s full production capacity was closer to 2.2 million bpd, which should be reflected in a revised quota, even though Nigeria has struggled to produce at its current allocation.
According to S&P Global Platts, Nigeria self-reported crude output of 1.27 million bpd in August, down from 1.44 million b/d in July, one of the lowest in the last few years.
Nigeria’s quota, which covers only crude oil and not condensate, is 1.614 million bpd for September and was scheduled to rise by roughly 17,000 bpd each month, in line with the OPEC+ alliance’s plans to gradually ease back on production cuts implemented in the pandemic.
Sylva insisted that the country deserves a higher quota, noting that aside its efforts to fix the technical difficulties, the basis for the current production quota, which was mainly because of the problems in the Niger Delta at the time, no longer existed.
“We’ve just put a request on the table, and we expect that to be looked at. We have capacity for more production than we are producing right now. Unfortunately, we are constrained by the quota,” the minister said.
OPEC and its allies are scheduled to meet October 4, with the current OPEC+ agreement calling for the group to collectively raise output by 400,000 bpd each month through the end of 2022 and a review of the pact scheduled in December 2021.
Sylva attributed Nigeria’s production struggles to technical problems from re-tapping reservoirs that had been shuttered to comply with the stringent OPEC+ cuts of the past 17 months and said output could rebound to around 1.7 million bpd by November and two million barrels per day by the end of the year.
