Nigeria agrees to 40,000 crude oil production cut

Nigeria has agreed to cut 40,000 out of her 1.7 million barrels per day crude oil production after two days of touchy negotiations in Vienna capital of Austria, by member countries of the Organisation of Petroleum Exporting Countries, OPEC, and their non-OPEC allies led by the Russian Federation.

This is part of a collective agreement to cut their outputs by 1.2 million barrels of oil per day (mbd).

OPEC countries however decided to take up the burden of limiting their production by 800,000 barrels a day (bd).

According to the Minister of State for Petroleum, Dr. Ibe Kachikwu, Nigeria could contribute up to 40,000bd, representing about 2.5 per cent of her 1.7mb current production level.

Kachikwu, who had expressed fears before the meeting that it would be difficult for Nigeria to agree to a production cut, however said the output cut was as a matter of fact in the best interest of Nigeria, adding that with larger oil volumes in the market weakening prices, Nigeria would have found it difficult to implement its budget for 2019.

Details of the agreement, according to the President of the OPEC Conference and Minister of Energy and Industry of the United Arabs Emirate, Mr. Suhail Mohamed Al Mazrouei, and Russian Energy Minister, Alexander Novak, at a press conference after their joint meeting, showed that OPEC countries would take out 800,000bd from the market, non-OPEC members would have to take out the balance of 400,000 with Russia contributing as much as 230,000bd of this.

Iran, Venezuela and Libya were however granted exemptions from the cuts because they either suffered sanctions or production disruptions, and would not be able to participate in the cut.

Speaking further after the press briefing, Mazrouei said that the parties took note of oil market developments since it last met in Vienna in June 2018, and reviewed the outlook for the remainder of 2018 and 2019.

According to him, the meeting observed that current oil supply and demand fundamentals confirm a well accommodated market following the concerted efforts of participating countries in the Declaration of Cooperation (DoC) toward restoring balance.

He further explained that they discussed the increasing market volatility and the broad consensus on the prospects for 2019 that suggests higher supply growth than global requirements, taking into account prevailing uncertainties.

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