Nigeria, two others exempt as OPEC agrees output cut to boost prices


Nigeria, Iran and Libya were granted exemption from a resolution by Organization of Petroleum Exporting Countries, OPEC, to cut members oil output by about 740,000 barrels per day by November 2016 to stabilize prices.

The daily production capacity of all members of the group at the moment stands at about 33.24 million barrels.

With continued decline in global oil prices, OPEC had struggled unsuccessfully for several months to reach a consensus on how to reduce production in a bid to stabilise prices.

The sticky point in arriving a consensus was Iran, which resisted any resolution that did not recognise its interest, considering it recently returned to the group after serving years of U.S. imposed sanctions.

The Iranian government had argued it would need some time to recover from the impact of the sanctions, which included restrictions on its oil production and exports.

Last Wednesday’s resolution was reached during the group’s meeting in Algiers, the Algerian capital.

Apart from accommodating the Iranian concern, the resolution also took into consideration Nigeria’s peculiar crisis situation.

Incessant attacks by Niger Delta militants on oil and gas production facilities in the region resulted in a massive cut in the country’s oil production capacity by almost 50 per cent, from an average of 2.2 million barrels per day.

The impact of the attacks has been a drastic drop in revenue earnings from oil exports, which has plunged the country into a major crisis underlining the current economic recession and the difficulty in funding the N6.06 trillion 2016 budget.

Consequently, with the decision to determine output levels of each member country scheduled for next month, Nigeria was granted exemption from any cut in production till further notice.

Libya was exempted for a similar reason, following series of attacks on its oil facilities by terrorists in recent months.

Iran was also exempted after having its economic sanctions lifted earlier in the year.

The decision to cut production by the group would be the first time in eight years.

Nigeria on Thursday tied the resolution to the growing cohesion among member countries, particularly its growing influence to help work harmoniously in identifying needs, challenges and ways to resolve them.

The Minister of State for Petroleum Resources, Ibe Kachikwu, who led Nigeria’s delegation at the meeting, said Nigeria’s exemption from the production cut was a result of recent challenges the country was facing, due to incessant vandalism of oil and gas facilities.

Mr. Kachikwu said the deal would enhance prospects for energy industry to realise its capacity.

He said the impact was already being felt, as global crude oil price rose by more than 5 per cent in the wake of the agreement.

“A steady increase in oil prices, which is one of the advantages the deal would produce, would most likely contribute positively to the revival of the economies of member countries, including Nigeria, currently undergoing challenges,” Mr. Kachikwu said.

The meeting was the first official meeting of OPEC organized by the new Secretary General, Mohammed Barkindo, since his appointment in August, 2016.

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  • River Jordan

    We hope lessons learned by the major forces within OPEC from the unpopular decision of flooding the market with crude in order to force the price down and push high cost producers (US shale producers) out of the market will be documented for future generations to steer clear of such thing. The overall beneficiaries of the action are the buyers of crude who got the commodity at a very low price while the exporting countries depleted their reserves at a giveaway price, hurting their economies. Now we are backtracking with a deep scar to remind us of our error of judgement.

    • Dejandon

      You know nothing of long term strategy with short term loss. Many shale gas companies went belly up. Banks will loathe to loan money for shale gas development because the question that will linger in their minds will be c what happens if Saudi gets angry about market share again?

      • River Jordan

        Let Saudi get angry about market share again and let us see who will suffer. Is it not the same Saudi that has started drawing much from her foreign reserve and cutting the salaries of public workers in order to fund this year’s budget? If your so-called knowledge of long term strategy were true, you would have known that there are more than 4000 wells in the US presently shut in, waiting for the price of oil to appreciate before they open up and start selling. It is the genuine market forces that will eventually determine a more realistic crude price and not the unsustainable effort that Saudi was forced to pull out of suddenly.

  • Militiaman


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    i may be forced to go and look for Premium Times office and go there to break plenty of things there.
    President Buhari has totally destroyed Nigeria and no journalist can use big English to cover that up.
    Buhari is the worst president Nigeria has ever had. If you like block this my letter again, you hear me?