Nigeria, along with other members of the Organization of Petroleum Exporting Countries (OPEC) and their allies in the non-OPEC, called OPEC+ on Tuesday agreed to voluntarily effect various cuts in their daily oil output aimed at realizing a total 7.2 million barrels target in January, 2021.
Between January 2020 and April 2022, the group agreed to cut almost 32 million barrels from members of total oil production capacity.
The voluntary cuts are to continue to apply till the end of the first quarter of the year as part of efforts to continue to stabilize the oil market and boost crude oil prices.
In February, OPEC+, consisting of members of OPEC and their allies in non-OPEC, are expected to cut a total of 7.125 million barrels per day, and 7.05million barrels per day in March.
Apart from Mexico, which was exempted from the decision reached at the end of the 13th OPEC and non-OPEC Ministerial Meeting held via videoconference since Monday, all others agreed to cut between 13,000 barrels and 1.88 million barrels of their daily production.
Ten members of the OPEC, including Nigeria, known as OPEC-10, agreed to cut a total 4.564 million barrels from their total daily production of about 26.683million barrels.
Also, the non-OPEC members agreed to cut a total of 2.636 million barrels per day out of their total daily output of 17,170million barrels.
Non-OPEC led by Russia consists of countries who are not members of OPEC, but share in the vision and aspiration of a common and stable global oil market,
Details of Voluntary cuts
Details of the voluntary output cuts announced at the end of the meeting on Tuesday showed Algeria will cut about 181,000 barrels of its 1.057million barrels daily production in January, leaving it with an approved output ceiling of 876,000 per day.
Also, Angola will cut about 261,000 barrels from its daily production figures of 1.528million barrels, leaving anew output limit of 1.267 million barrels per day, also applicable in the same manner in February and Mar
Congo will cut 56,000 barrels from 325,000 barrels per day, leaving 269,000 barrels per day production limit for the three months; Equatorial Guinea will cut 22,000 barrels from its 127,000 barrels per day output, leaving 105,000 barrels per day for the corresponding period, and Gabon, 32,000 barrels cut from its 187,000 barrels daily output, leaving 155,000 barrels per day output capacity.
For Iraq, about 796,000 barrels would be cut from its 4.653 million barrels per day output, leaving 3.857 million barrels per day output for the three months, while Kuwait agreed to cut about 480,000 barrels per day from its 2,809 million barrels per day, leaving about 2.329 million barrels per day out for the agreed period.
Nigeria, which has been producing 1.829million barrels per day, below its approved output benchmark of 2.3 million barrels in the 2021 Budget, would again cut about 313,000 barrels, to bring its daily output figure further down to 1.516million barrels per day till March.
OPEC’s highest producer, Saudi Arabia with 11million barrels per day, would cut about 1.881 million barrels per day, bringing its daily output figure down to 9.119 million barrels per day till March.
United Arab Emirates with total daily production capacity of 3.168 million barrels would cut about 542,000 barrels, leaving about 2.626 million barrels per day till the end of the first quarter.
Members of the non-OPEC who agreed to cut their outputs for the corresponding periods include Azerbaijan 123,000 barrels from 718,000 barrels, leaving 595,000 barrels per day; Bahrain, 35,000 barrels from 205,000 barrels, leaving 170,000 barrels per day; Kazakhstan, 292,000 barrels from 1.709 million barrels, with 1.417 million barrels daily output limit left.
Others are Malaysia with a cut of 102,000 barrels from its 595,000 barrels per day, leaving 493,000 barrels output limit; Oman, 151,000 barrels cut, from 883,000 barrels daily output, leaving 732,000 barrels production limit; Sudan, 13,000 barrels cut from 75,000 barrels per day, leaving 62,000 barrels per day output ceiling.
Russia, which is the leader in the group will 11million barrels per day production capacity, would cut about 1.881 million barrels, leaving its new daily production limit at 9.119 million barrels, while South Sudan, with daily output of 130,000 barrels would be left with a daily production capacity of 108,000 barrels after agreeing to cut about 22,000 barrels.
In all, apart from the 7.2million barrels daily production cut in January from the total 43.853million barrels by the entire OPEC+, all members agreed to cut 7.125 million barrels from 36.728million barrels per day in February, and 7.050million from 36.803million barrels per day in March
At the end of the meeting, members reaffirmed their continued commitment the Declaration of Cooperation (DoC) to a stable market in the mutual interest of producing nations; the efficient, economic and secure supply to consumers; and a fair return on invested capital.
Recalling the decision by all DoC participating countries at the 10th (Extraordinary) OPEC and non-OPEC ministerial meeting in April 2020 to adjust downwards overall crude oil production, the meeting noted the unanimous decisions in June 2020, and the outcomes of December 2020.
The DoC participating countries began last year to introduce adjustments of about 1.7 million barrels per day output, with additional voluntary contributions raising the volume to about 2.1 million barrels per day.
The adjustments were agreed at the 7th OPEC and non-OPEC Ministerial Meeting in December 2019, as a response to support the continued market stability in 2020.
The Meeting highlighted the impact of the COVID-19 pandemic on the world economy and markets and commended member countries for undertaking the largest and longest crude oil production adjustments in history in response to the exceptional challenges and market conditions caused by the pandemic.
On the rising COVID-19 infections, the return of stricter lockdown measures and growing uncertainties, the meeting said these have resulted in a more fragile economic recovery expected to carry over into 2021.
Despite growing market sentiment boosted by recently introduced vaccine programmes and improved asset markets, the meeting emphasized the need for caution due to prevailing weak demand and poor refining margins, the high stock overhang and other underlying uncertainties.
Acknowledging the need to gradually return 2 million barrels per day to the market, the meeting said the pace will be determined by market conditions.
The Ministers reconfirmed their decision during the last meeting to increase production by 0.5 million barrels per starting in January 2021, and adjusting production from 7.7 million barrels per day to 7.2 million barrels per day.