25.3 C
Lagos
Monday, May 16, 2022

Nigeria seeks OPEC approval to raise oil production to 2.2 mbpd

Nigeria is in talks with OPEC+ to raise its oil production quota to about 2.2 million barrels per day, the OPEC member’s petroleum minister told reporters on Tuesday.

“What we’re getting right now is 1.74 million barrels per day (bpd) we think we can do about 2.2 [million bpd],” petroleum minister Timipre Sylva told reporters on the sidelines of the Gastech conference in Dubai on Tuesday.

He added that his country can achieve that production level in six months.

Nigeria was currently producing below its 1.74 million bpd quota due to technical challenges, Sylva said, but he expected to hit that output target in the next month or two.

Sylva said that he didn’t expect the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, to take any extraordinary measures when they meet next month.

He said that current oil prices were a very “comfortable level” adding that $70 a barrel was an optimal figure.

Brent prices were up 81 cents a barrel at $74.73 a barrel by 1220 GMT.

Sylva said that he expects peak oil demand to come in 2030.

Meanwhile, OPEC and its allies struggled again to pump enough oil in August to meet global demand as it recovers from the coronavirus pandemic, potentially adding to upward pressures on oil prices.

Several OPEC+ members such as Nigeria, Angola and Kazakhstan have struggled in recent months to raise output due to years of under-investment or large maintenance work that has been delayed by the COVID-19 pandemic.

Cheating and producing above targets have traditionally been one of OPEC’s main problems but the situation has changed in recent years as investment has flowed into the renewables sector as part of the energy transition.

Despite the rise in renewables, the world is still consuming near-record amounts of crude, which will put additional pressure on Saudi Arabia and OPEC’s other leading Gulf producers to pump more oil in the years to come.

READ ALSO: About 20% of Nigeria’s workers out of job due to Covid~NBS

On Tuesday, two OPEC+ sources told Reuters OPEC+ compliance with oil production cuts rose to 116 percent in August.

The figure, which excludes Mexico, compares with 109 percent in July, and comes as the group boosted production by 400,000 barrels per day in August and September.

The inability of some members to raise output to agreed levels suggests a supply gap could develop as the group proceeds with a plan for monthly output increases to unwind the rest of record supply cuts made in 2020.

That could increase the burden on top producers like Saudi Arabia if demand starts to really recover and exceed pre-pandemic levels, which forecasters say could happen as soon as the second quarter of next year.

Earlier this month, the Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+ as the alliance is known, agreed to increase output targets by a further 400,000 bpd in October.

Production data for August shows that the main under-producers were African OPEC members Nigeria and Angola and non-OPEC member Kazakhstan.

Under investment, a lack of exploration and the exit of some oil majors, has stymied efforts by Angola and Nigeria to raise output, an issue that is expected to continue impacting the West African producers in the near future.

Kazak production was hindered mainly by field maintenance at its biggest oil producing field, Tengiz, which lasted from early August to mid-September.

The OPEC+ Joint Technical Committee (JTC), which assesses market fundamentals is scheduled to meet on Sept. 29 ahead of an Oct. 4 meeting of ministers, is expected to finalise the compliance figures.

Iraqi oil OPEC minister Ihsan Abdul Jabar, said on Sunday OPEC+ is expected to stick to its current production accord it meets next “if prices remain stable”.

This effectively means going ahead with another increase of 400,000 bpd for at least the month of November.

This view was echoed by UAE Energy Minister Suhail al-Mazrouei who told reporters of the sidelines of the Gastech conference in Dubai on Tuesday that he saw no need for changes to the current deal.

Latest news
- Advertisement -spot_img
Related news