RIYADH: Nigeria is fully committed to meeting the ambitious targets on crude oil output set by the new OPEC+ agreement, according to the head of the country’s delegation at the Organization of the Petroleum Exporting Countries (OPEC).
Mele Kyari, managing director of the Nigerian National Petroleum Corporation, told a webinar organized by consultancy firm Gulf Intelligence that the country could achieve full compliance with the level of cuts agreed with OPEC+ by the middle of next month at the latest.
“The shutdowns we are experiencing today mean that we will come to full conformity at the latest by mid-July, and we could even get there by the end of June,” he said.
Nigeria, along with Iraq, Kazakhstan, and Angola, were regarded as the laggards in doing their part to meet the historic cuts of 9.7 million barrels per day (bpd) agreed first in April and extended by another month last weekend.
Kyari admitted that Nigeria had fallen short of the target by around 100,000 bpd but added: “Managing reservoirs in Nigeria is very different to other jurisdictions and we have to have a plan around the wells themselves.
“If you pull all the wells down at the same time you may not be able to recover them. It is a gradual process to cut down production by well and reservoir level.”
In what will be regarded as a significant vote of confidence in the new oil regime put in place by Saudi Arabia and Russia as the two biggest producers in the OPEC+ alliance, Kyari said: “We are fully committed to making sure we comply with the cuts.”
At the OPEC+ webinar meeting last weekend, Saudi Energy Minister Prince Abdul Aziz bin Salman insisted on full compliance with the new production levels and warned all participants to be “vigilant” on output levels, which will be supervised by a monthly meeting of OPEC+ ministers.
Kyari said the OPEC+ measures were necessary to restore balance to global oil markets. “It’s very obvious the market has not achieved balance and is unlikely to do so before the end of the year, and not very soon even in 2021.
“The forecasts indicate there will still be an oversupply of about 7 million barrels even by the end of the year.
“The markets will not balance until people do things to pull down production and supply naturally comes down with that. The OPEC+ agreement is designed to bring down that oversupply by the end of the year so we can see some balance,” he added.
On the recent run up in the price of crude oil — which has more than doubled in the past six weeks to above $40 a barrel for Brent crude — Kyari said: “It is actually driven more by sentiment than demand. We have not seen that much of a rise in demand, and even the cuts did not achieve 100 percent conformity.
“The significant jump we’ve seen appears very cosmetic to me and that means the price could slip back to the levels we saw in March.”