By Nse Anthony-Uko
(Sundiata Post) –OPEC’s secretary general, Muhammad Barkindo, told reporters after an energy conference in Istanbul, Turkey on Sunday, that the elite club of oil producers considers it premature to talk about deeper oil output cuts.
Meanwhile there are strong indications that 14-member oil cartel, may rein in Nigeria’s oil production by limiting supply above the current 1.6 million barrels per day production to shore up prices.
Issam Almarzooq, Kuwait’s oil minister said that Libya and Nigeria which have boosted oil production since they were exempt from global cuts this year, may be asked to cap their crude output soon in an effort to help re-balance the market.
Last Friday, delegates at an OPEC meeting told the Wall Street Journal that the organisation is considering capping Libya and Nigeria’s production which is seen complicating the cartels plans to hold a floor to oil prices.
“Nigeria is definitely becoming a worry for us,” said a delegate to the meeting from a Persian Gulf Arab country.
Both countries have managed to control internal crises in their domains helping them shore up production.
Libya’s crude-oil output has surged to over 1m bpd, up from 400,000 in October while Nigeria’s output has risen to 1.6million bpd, up 200,000 since October following the restart of loading at Forcadoes terminal.
In May Ibe Kachikwu in an interview on May 25, said that Nigeria was not averse to joining output cuts if the country can get its production back to thresholds of 2.2million bpd capacity before the militants attacks took on grim tenor last year.
It seems certain now that OPEC would test Nigeria’s resolve in this regard. However, it is still unclear, if Nigeria would be allowed to get back production up to 2 million bpd before the cap is implemented.
Analysts say this brings into the focus the need to ramp up refining capacity for excess production from Nigeria when a limit to production is put in place by OPEC.
“A country like Nigeria should make its refineries operationally efficient and build additional ones because we have a dynamic economy where demand for refined petroleum products and derivatives keep increasing,” said Diran Fawibe, chairman/CEO, International Energy Services Limited in an interview.
However, oil prices have yet to respond to interventions by OPEC and non-OPEC nations to cap output so as rebalance the market.
Oil prices traded around $43 on the spot market stood yesterday and analysts now consider a $50 oil unrealistic in the medium term.
Goldman Sachs last week revised their price forecasts for crude oil downwards indicating that the market may be bearish far longer than anticipated largely due to threat from shale producers.
Working rigs targeting crude numbered 763 last week according to Baker Hughes data compiled on July 7.
“Shale producers kicked back into growth mode after taking a one-week break from 23 straight weeks of rig additions,” said a note from Goldman Sachs obtained by BusinessDay.
The analysts further said, “Shale explorers have more than doubled the rig count from a low of 316 in May 2016, anchoring a surge in US production with prices languishing around $45 this month.”