OPEC is trying to persuade Libya and Nigeria to join cuts if the cartel agrees to reduce production, delegates told S&P Global Platts, while the OPEC and non-OPEC leaders of the deal, Saudi Arabia and Russia, are still discussing how much to cut and how to share these cuts out.
Libya and Nigeria, exempted from the deal forged in November 2016 because of violence that had severely disrupted their respective production, have recovered their output and have been raising production in recent months. The two countries are seen reluctant to cut because of a still fragile security situation, but this time around, the other OPEC members may not listen to any excuses and are urging the two African members to join a possible cut.
Following severe production and export disruptions in the early summer, Libya’s oil production has been steadily rising over the past three months.
As of two weeks ago, Libya was pumping close to 1.3 million bpd, and NOC’s chairman Mustafa Sanalla said that he hoped Libya would be exempted, again, from any new OPEC-wide production cuts.
Nigeria is also boosting oil production, which is set to further rise with the imminent start-up of the Total-operated Egina oil field.
However, the Nigerian National Petroleum Corporation (NNPC) warned last month that sabotage attacks on oil pipelines were on the rise, while analysts also warn that violence may return in Nigeria’s oil industry ahead of the general elections in February.
While OPEC delegates are persuading Libya and Nigeria to join the cuts, the nature of such cuts has yet to be defined, and the leaders of the deal, the Saudis and the Russians, are said to be currently at odds over who’s cutting how much.
Saudi Arabia is looking to persuade Moscow to make a hefty cut in the region of 250,000 bpd-300,000 bpd, while Russia has reportedly indicated that it wasn’t okay with cutting this much, and could agree to half that proposed amount, Reuters reports, citing OPEC and non-OPEC sources.
Meanwhile, Iran will not be negotiating its production quota. Oil Minister Bijan Zanganeh said on Wednesday, as quoted by state news agency IRNA:
“As long as Iran is under sanctions, the Islamic Republic’s OPEC quota will not be discussed with anyone.”
By Tsvetana Paraskova for Oilprice.com