A statement by Saudi energy minister on extension of oil cut agreement will be good news Nigeria, PREMIUM TIMES can report.
Saudi Arabia’s Energy Minister, Khalid Al-Falih, said on Monday that oil markets were rebalancing after years of oversupply.
Speaking at an industry event in Kuala Lumpur, Malaysia, Mr Al-Falih said he still expected an OPEC-led deal to cut output during the first half of the year to be extended to all of 2017.
“Based on consultations that I’ve had with participating members, I am confident the agreement will be extended into the second half of the year and possibly beyond,” said Mr. Al-Falih.
He explained further that recent price falls had been caused by the low demand season and refinery maintenance, as well as by non-OPEC production growth, especially in the United States.
For the first time since the OPEC agreed to cut output in November 2016, oil prices slid below $45 a barrel last Thursday.
PREMIUM TIMES gathered that the development came as U.S. shale confounded OPEC’s attempts to prop up prices.
Nigeria, Africa’s largest economy, seeks for a further six-month extension of its exemption from reducing oil production granted by the oil producers’ group.
Thirteen OPEC members and 11 non-OPEC countries, led by Russia, had agreed on November 30, 2016 to reduce their production by about 1.8 million barrels per day (bpd) for six months beginning from January in an effort to drain a glut of crude that held down prices for over two years.
Member countries at the meeting agreed to exempt Iran, Libya and Nigeria from the deal.
Nigeria got the exemption because of the production challenges caused by militant attacks on the country’s oil facilities in its Niger Delta region.
Speaking at a news conference in Houston on Wednesday, Nigeria’s Minister of State for Petroleum Resources, Ibe Kachikwu, said the country would need a little more time to complete a number of critical export pipelines, some of which were nearing completion.
“The indications that I have so far is that there is a willingness to extending that,” Mr. Kachikwu had said. “I expect we (Nigeria) will get OPEC exemption but one year from now will it be renewed? I am not too sure.”
Nigeria relies on oil proceeds to fund its budget deficit and execute major capital projects.
The country is in its second year of recession, brought on by lower oil prices, which have slashed government revenues, weakened the currency and caused dollar shortages, frustrating businesses and households.
OPEC will meet on May 25 in Vienna to determine whether to extend its production cut deal.