Nigeria Supports OPEC Cut Extension Under “the Right Terms”

Nigeria supports an extension of a deal between OPEC, Russia and other non-members to cut oil supply until the end of 2018 “as long as the right terms are on the table” regarding its own participation, its oil minister said.

He said there is growing agreement among other members of the Organization of the Petroleum Exporting Countries to extend the deal.

“There isn’t any reason to change what is a winning formula,” oil minister Emmanuel Ibe Kachikwu told Reuters, adding “there is a consensus to extend. The issue will be the duration.”

Nigeria itself, however, is exempt from the deal.

OPEC, along with Russia and nine other producers agreed to cut oil output by about 1.8 million barrels per day (bpd) until March 2018 in an attempt to ease a global excess that weighed on prices.

The group will meet in Vienna later this month to discuss whether to extend that deal.

Nigeria’s output has rebounded since its exemption, granted last year after militant attacks that cut its output to close to 1 million bpd, but Kachikwu said the recovery is ongoing.

“We’ll be looking for a number that enables us to contribute ... it’s in the range of 1.8 to 1.9 (million bpd), preferably closer to 1.9,” he said of the production cap.

While there have not been any significant attacks on the nation’s oil infrastructure since January, the peace is on shaky ground.

On Friday, the Niger Delta Avengers, the group that led the bulk of the 2016 attacks, said it had ended its ceasefire.

Kachikwu described the 1.8-1.9 million bpd figure as “the sort of number where we can tolerate the cuts, and yet be able to survive as a nation.”

Nigeria’s total output reached 2.03 million bpd in October, but the ministry said only about 1.67 million bpd of that total is crude oil. The remainder is condensates, an ultra-light oil that is exempt from its potential cap.

Kachikwu said the nation is producing around 300,000-350,000 bpd of condensates, and that OPEC is now tracking that figure.

“Historically, Nigeria hasn’t been serious in terms of identifying its condensate volumes. But that’s one of the things that we’re getting more efficient at doing,” Kachikwu said.