Nigeria is not violating OPEC+ agreement over production cut done to stabilise crude oil prices at international markets, but rather striving to ensure it meets 100 percent compliance by August this year, BusinessDay investigation reveals.
Sources at the highest level of the oil and gas industry have described as untrue the allegation by the Saudi Arabia’s Minister for Energy, Abdulaziz bin Saud that Nigeria is not complying with the OPEC+ agreement over crude oil production cut.
This is as Nigeria did a little better at 77 percent, and Angola even better at 83 percent. But that was not good enough, they say.
The sources that say they are not authorised to talk query the veracity of the source where the Saudi Arabia minister’s got his information from. They claim that the allegation is not backed by facts and is far from the truth.
One of the sources asks where is the crude oil? He says Nigeria is struggling to meet the 1.7 million barrels per day production currently, as some oil wells are presently shut down and may not even be reactivated for a long time to come because of COVID-19.
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According to him, to completely comply with the production cut will take a process because the country cannot just shut down it wells without considering the economic implications of such action.
He says the government will need to determine which of the facilities supply gas for the purpose of power generation, which one would be shut down and the country would not incur huge sum of money to revive them when the time to go for normal production quota comes, or would be difficult to revive.
He notes that the international oil companies have been given guidelines to follow in this respect and by August they will achieve 100 percent compliance.
He told BusinessDay that as matter of fact, Nigeria will pay back for the infractions that have taken place since the commencement of the production cut after it must have successfully put in place the necessary things to meet the OPEC+ decision on compliance.
Another source says there is a serious production deferment in the country and it cannot be true that Nigeria is not complying with OPEC +agreement.
He explains further that all the works that are supposed to be going on for production purposes have been stopped because of COVID-19. All informations on well maintenance are no longer accessible by the industry because there is no way to get them.
“As matter of fact, we are afraid the production may further decline as some of the wells, especially those that required injections or experiencing low pressure, we may not be able to reactivate. If they are dead they are dead, for what purpose would it be to be investing about $3 million on a well that produces 50 barrels a day,” he said.
“You now look at it and now ask if it is economical to resuscitate such wells.
“I want to let you know that it was because of the precarious situation of crude oil that the minister of state for petroleum resources, Timipre Sylva, has now turn his focus on gas development.
“Where is the production? Is not what you have in excess that you violate over?” he asked.
The Wall Street Journal reported last week that Saudi Energy Minister Abdulaziz bin Saud had threatened Nigeria, Angola, and Iraq with another oil price war if they didn’t get in line with the production cuts, according to OPEC delegates. If they kept producing more than their quotas, Saudi Arabia would start selling its crude at a discount on these three countries’ key markets, stealing market share.
OPEC’s crude oil production last month fell to the lowest in 30 years, at 22.69 million bpd. However, Iraq, Angola and Nigeria still fell short of their quotas: Iraq only managed to achieve 70 percent compliance, Nigeria did a little better at 77 percent, and Angola even better at 83 percent. But that was not good enough.
