[By Sopuruchi Onwuka]
Nigeria posted an average daily crude oil export of 1.53 million barrels in October, leading other African countries in both volume supplies to the international market and expected financial returns.
According to a table of oil flow to the international market from key producers that currently control market forces, Nigeria’s output to the market maintained a plateau from September levels which remain above the country’s quota of 1.495 million barrels per day.
At the prevailing volume of output to the export market, Nigeria’s production quota performance in the period averaged 89.5 percent, representing marginal overproduction of 35,000 barrels per day.
But calculation of Nigeria’s output quota has been a complicated controversy in OPEC circles where classification of Nigeria’s liquid production from wellheads remains ambiguous. Most of the country’s oilfields produce a combination of crude oil, condensate and natural gas liquids.
Whereas the OPEC + quota are specific on crude oil, Nigeria’s exports to the international markets are most times blends of crude oil and condensate. The country’s OPEC Governors have always contended that output from high volume producing fields comprise high proportions of condensate, and thus should not be counted in the country’s quota.
In October, Nigeria’s 1.53 mbd output is considered above its quota at 1.53 mbd. But while the country insists that about 160,000 barrels per day produced at deepwater Agbami field is condensate and should not be counted in OPEC+ quota, traders and refiners who also form data sources for OPEC pass off Agbami grade as crude oil.
The table compiled by Platts also showed that Nigeria falls within 10 members of the coalition of 22 crude oil producing nations that violated production limits in the month and whose quota rascality also boosted market supply and jeopardized the group’s goals of supporting higher prices for the commodity.
Nigeria is a key member of the Organization of Petroleum Exporting Countries (OPEC) and the country’s Mohammed Barkindo remains the Secretary General of the world’s oil producer coalition which has influenced global oil prices for over 47 years.
The Oracle Today reports that OPEC and its allies implemented 9.7 million barrels per day (mbd) production cut accord in 2016 following an acute drop in crude oil prices.
The volume of oil withdrawal from the market narrowed to 7.7 million b/d from August to December in a gradual ease out arrangement as economies of member countries struggle with budget deficits.
Oil prices have slid in recent weeks from above $45/b in September to around $40/b, reflecting the bearish outlook and putting OPEC+ members’ finances under strain.
The group of 22 countries including Russia and Saudi Arabia also plans to further reduce market supply cuts to 5.8 mbd for a one year period beginning from next year to April 2022.
The cuts are determined for most countries from an October 2018 baseline production level, except for lead producers, Saudi Arabia and Russia, which were given baselines of 11 mbd.
Troubled OPEC members including Iran, Libya and Venezuela are exempt from the output cut deal due to their peculiar internal and external economic and trade crises respectively; while non-OPEC Mexico volunteered out of the arrangement last June
A nine-country Joint Ministerial Monitoring Committee of the OPEC+ coalition is expected to meet on November 17 to assess quota compliance ahead of the group’s next formal meeting at the end of the month in Vienna.
Among OPEC countries, Libya which is exempt from the quota restrictions topped production growth with 290,000 barrels from 170,000 barrels per day in September to 460,000 barrels per day in October, leading total production addition among the coalition members in the month.
Iraq followed with a 50,000 barrels per day production leap from 3.74 mbd in September to 3.79 mbd in October. Kazakhstan also posted 50,000 barrels per day output growth, boosting production 1.4 mbd in September to 1.35 mbd in October.
Overall, OPEC+ crude oil output rose 210,000 b/d in October, with OPEC’s 13 members pumping 24.54 mbd, while nine allies led by Russia supplied 12.73 mbd to the market.
Large volume supplies came from high capacity producers that lead both ends of the coalition. While Saudi Arabia pumped 8.99 million b/d in October, right at its quota, according to the survey, while Russia, which has an identical cap, produced 9.11 million b/d.