Production cut deal exemption: How ready is Nigeria ahead of deadline?

There have been concerns among stakeholders on how ready is Nigeria ahead of the deadline for the exemption from the deal among top global crude oil producers including members of Organisation of Petroleum Exporting Countries (OPEC) and non members including Russia.

The aim of the agreement was to cut global crude oil output by as much as 1.8million barrels per day and perhaps force crude price to go north.

However, because Nigeria was affected by increased attacks on major oil installations by the Niger Delta Avengers (NDA), crude oil production fell as low as 800,000 barrels per day from an OPEC quota of 2.2mbpd production prior to the attacks.

The Minister of State for Petroleum Resources, Dr Ibe Kachikwu, successfully lobbied global players to exempt Nigeria from the deals and his wishes were granted.

However, the Secretary-General of OPEC, Muhammadu Barkindo, emphasized that the stakeholders agreed to exempt Nigeria for six month only. By implication, it means must comply with the OPEC deal from July 2017 irrespective of what the state of affairs in the Niger Delta.

Nigeria still leads other African countries in daily crude oil production, despite strong challenge from Angola, another African country which is a member of OPEC. Angola’s average production in 2017 is 1.668mbpd while Nigeria’s average daily output is 1.78mbpd between January and April 2017.

While negotiations were ongoing with other global oil players on how to exempt Nigeria from the deal, the Federal Government, led by Vice President, Professor Yemi Osinbajo, has been holding meetings with the leaders of the Niger Delta region and there is relative peace in the region at present.

The Managing Director of Degeconek and the National President of Nigerian Association of Petroleum Explorationists (NAPE), Mr Abiodun Adesanya, argued that Nigeria should focus on increasing its crude oil reserves from current 37 billion barrels by ensuring peace in the Niger Delta region, exiting Joint Ventures (JV) cash calls obligations and begin fresh round of licensing rounds of marginal fields. He said these activities will increase exploration activities and increase reserves.