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Will OPEC look to Nigeria for output cuts as its output recovers?

Published 22/05/2017, 11:05
© Reuters. People ride a boat past an oil discharge facility in Lagos
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By Libby George

LONDON (Reuters) - Nigeria's last remaining shuttered oil terminal is resuming exports just days before the West African nation heads into OPEC talks - potentially awkward timing for a country that was exempt from the first round of output cuts.

A second vessel, the Densa Orca, arrived on Monday at the Forcados terminal after the Astro Perseus tanker loaded the first cargo in seven months late last week. At least one additional tanker is expected to load a cargo of Forcados this month. As a result, exports of the grade could return to their usual 200,000-240,000 barrels per day (bpd) by June, bringing Nigeria's production nearly back to levels seen before militant attacks in 2016.

The attacks throughout 2016 in the Niger Delta oil hub hobbled production - keeping Forcados shut for all but a few weeks since early 2016 and gaining the nation a reprieve from 1.8 million bpd worth of output cuts agreed between the Organization of the Petroleum Exporting Countries (OPEC) and other producers. Attacks, however, largely abated this year following visits by Nigerian Vice President Yemi Osinbajo to the restive Delta region, and a near-tripling in the budget for a militant amnesty programme.

Maintenance on the Bonga oilfield in March, itself a more than 200,000 bpd export stream, held Nigerian output below normal for at least two months, and the closure of the primary export pipeline for Qua Iboe, the nation's largest export stream, also limited exports. But both are edging back to normal, which would bring crude oil output close to the 1.8 million bpd level that oil minister Emmanuel Ibe Kachikwu said in January would prompt his country to join oil producers' production cuts.

© Reuters. People ride a boat past an oil discharge facility in Lagos

The rebound, which coincides with global outages at a six-year low, could press Nigeria to come into the fold of cuts should an extension deal be reached in Vienna this week.   

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