Indications emerge today that the Organisation of oil producing countries (OPEC) and non-members including Russia and Oman may want a supply cap of 1.8 million applied to global production in 2016 to stay past December 2018.
Prior to the meeting, Saudi Arabia’s energy minister said OPEC and other big-oil producing allies should find ways to cooperate beyond their petroleum-production limits this year.
“We should not limit our efforts to 2018. We need to be talking about a longer framework for our cooperation,” Saudi Arabia’s top oil official Khalid al-Falih told reporters ahead of a meeting of the Organization of the Petroleum Exporting Countries’ committee here in Oman’s capital. OPEC’s message to the world, he said, should be “this is something that is here to stay.”
Falih, a prominent voice in OPEC gave the most explicit call for the 14-nation cartel and 10 non-member allies to keep supporting the oil market into 2019.
There are also indications that OPEC and non-OPEC members may be looking at an agreement beyond 2018 that may be in the form of a collective ceiling on production that would reflect more equity and be harder for countries like Kazakhstan to cheat, sources at the meeting in Oman told some reporters.
However, worries of dip in revenue by Nigeria could be mitigated by an oil rally that has seen oil prices rise from around $45 a barrel in June to over $70 a barrel this month in part because of the group’s agreement to reduce the world’s oil production by about 1.8 million barrels a day, or nearly 2% of global output.
“We are telling Libya it is more beneficial to look at oil revenues not the number of barrels they are producing,” Falih is reported telling Libya, a message that may well apply to Nigeria.
After searing attacks on oil and gas infrastructure in 2016, Nigeria lost a third of its production, temporarily ceding Africa’s top oil producer spot to Angola before a truce agreed in the last quarter of 2016, saw militants declare a cease fire.
With the opening of the Forcados terminal, crude oil exports rose to 1.93 million barrel in September and Nigeria was brought into the supply cap deal when OPEC and non-members met on November 30.
This is fuelling concern over Nigeria’s plans to fund its 2018 budget of N8.6trillion, partly through projected oil revenue of N2.442 trillion at benchmark price of $45 per barrel and daily oil production level of 2.3 million barrels per day.
ISAAC ANYAOGU
