Africa’s top oil producer poised to give OPEC an output headache
Add independent Nigerian drillers to the list of oil producers itching to supply more crude at a time when OPEC and allies like Russia are trying to restrict output and prop up prices.
Domestic Nigerian producers are aiming to pump almost 250,000 barrels a day more crude by 2020 as part of a wider plan for the nation to lift output to 2.5 million a day, Oil Ministry data show. Shoreline Group, the third-biggest independent, wants to double output by December with Seplat Petroleum Development Co., the second-largest, also intending to produce more.
They are planning to add barrels at the same time as Nigeria participates in a global pact to restrict oil supply that’s being led by the Organization of Petroleum Exporting Countries and non-member nations including Russia. If any one country relents — and similar internal pressures are bubbling up elsewhere — then the entire deal could come under strain.
“If they can pump more in Nigeria, I don’t see why they wouldn’t,” said Warren Patterson, a commodity strategist at ING Bank NV. “If you get Nigeria exceeding the cap, then you’re going to get others who pump a little bit more. The longer the deal goes on for, the more likely it’s going to fall apart.”
Countries and companies both inside and outside OPEC are looking to add production. Iraq is building infrastructure to allow a huge increase in capacity, while Iran’s oil minister has said the country can produce more almost instantly. An Angolan field will come on stream by year end and add 250,000 barrels daily, while companies in Russia pushed to pump more before the country renewed its supply-curbs deal with OPEC late last year.
Along with Libya, Nigeria’s involvement was critical when OPEC agreed with non-member producers to extend global curbs to oil production until the end of 2018. It pledged not to let output exceed 1.8 million barrels a day in 2018.
The country’s total planned increase is 700,000 barrels a day. Just over a third will come from the state-run Nigeria Petroleum Development Co., a third from independents, and the remainder from oil majors. The expansion depends, among other things, on peace being maintained in the Niger Delta. A militant group said last month it would attack oil and gas
Read more …. Sweetcrude Reports