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.