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The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members led by the Russian Federation yesterday indicated that they could raise their production levels by adjusting compliance with previously agreed output cuts to 100 per cent as against the 147 per cent recorded so far.
Rising from the 4th OPEC and non-OPEC ministerial meeting which held in Vienna. Austria. under the Co-Chairmanship of OPEC President. Suhail Mohamed Al Mazrouei. who is Minister of Energy and Industry of the United Arab Emirates. and Minister of Energy of the Russian Federation. Alexander Novak. the groups said they in May 2018 recorded a conformity level of 147 per cent in the 2016 production cut agreement they reached and would now adjust their compliance to 100 per cent.
They however did not give out any concrete figures as regard how much of oil they planned to bring back into the market with the adjustment of their compliance rate.
OPEC had on Friday announced its members would adjust their compliance levels to the OPEC-only agreement. which it said was 152 per cent as at May to 100 per cent. but also gave no clear output targets. Experts. however. expected that its allies in the non-OPEC group would follow the same direction after the Saturday meeting of both blocs.
Following a slide in oil prices. OPEC and its allies in 2016 initiated and followed up with a pact to cut output by 1.8 million barrels per day (mbpd). The measure had helped rebalance the market in the past 18 months and lifted price to around $75 per barrel from as low as $27 b reported in 2016.
However. reports indicated that unexpected production outages in Venezuela. Libya and Angola have brought supply cuts to around 2.8mbpd in recent months. with the group stating a communiqué of their meeting that they will adjust their levels of compliance to the agreement.
They stated in the communiqué obtained by THISDAY in Abuja after the meeting that they respected the rights of people and nations to permanent sovereignty over their natural wealth and resources. but reaffirmed their continued commitment to the Declaration of Cooperation (DOC) to a stable market. the mutual interest of producing nations. the efficient. economic. and secure supply to consumers. and a fair return on invested capital.
They also noted the overall improvement in market conditions and sentiment. as well as the return of confidence and investment to the global oil industry.
“Recalling the 171st OPEC conference resolution reached on 30 November 2016 for a production adjustment of 1.2 million barrels a day (mbd) for OPEC member countries. with the understanding reached with key non-OPEC participating countries. including the Russian Federation. to contribute a production adjustment of 0.6mbd.
“Recalling the DOC reached on 10 December 2016. and noting that countries participating in the DOC have exceeded the required level of conformity that had reached 147 per cent in May 2018.
“Accordingly. the 4th OPEC and non-OPEC ministerial meeting hereby decided that countries will strive to adhere to the overall conformity level. voluntarily adjusted to 100 per cent. as of 1 July 2018 for the remaining duration of the DOC and for the Joint Ministerial Monitoring Committee (JMMC) to monitor the overall conformity level and report back to the OPEC and non-OPEC ministerial meeting.“ said the communiqué.
The group equally stated they will meet again on December 4. 2018 to review their decision and its impacts on the market.
Meanwhile. Nigeria’s Minister of State for Petroleum Resources. Dr. Ibe Kachikwu. has explained the country was committed to pushing through policies that would increase the value chain of her petroleum resources.
Kachikwu. in a presentation he made at the 7th OPEC Conference. said this was necessary in the wake of growing uncertainties in the global oil market. especially with prices.
According to him. the uncertainty will be determined by population changes. economic growth. policy changes. technology advancements and price uncertainties.
To mitigate the impacts of these on Nigeria. he said the country would create new policies and legislations that could increase value-adding investments in the industry.
According to him. policies increased energy efficiency and renewable energy sources are expected. while technological innovations will affect the level of exploitation of tight and offshore play like hydraulic fracturing of shale formations.
Electrical vehicles. and gas as future energy sources. he noted would also impact the industry.
“Therefore. the market of crude oil will always portray that inherent characteristic of uncertainty. Nigeria is focused on implementing initiatives that would increase the value chain of petroleum resources within Nigeria.
“Therefore. our focus areas have been emplacing new policies and legislations in the nation. Gas and petroleum policies are targeted towards making Nigeria the best environment for investors.
“Developing a business environment that increases general investor confidence. Unleashing a national gas revolution. that puts us in the best position to capitalize on an international gas revolution. Efforts are being exerted to ensure fiscal and legal terms for gas are favorable for both investors and countries.“ Kachikwu explained.
The minister also stated that. “Improving our downstream infrastructure. such that we can domicile the actual benefits of crude. its petroleum products. Modular refineries and conventional refineries are considered as options to reduce costs associated with petroleum products.“
