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OPEC+ in fix over production quota for Nigeria, others

Organization of Petroleum Exporting Countries allies (known as OPEC+), are in a dilemma to resolve quota disputes arising from African countries grouse over the volume of production cut out for them next year.

The rising disagreement has forced OPEC+ members' meeting slated for the weekend, November 25 to be precise, to be moved backward by five days to November 30. 

Themorningstar.com.ng  gathered that the major oil producers' group's talks were pushed back from this weekend so as to allow the cartel resolve complaints from Nigeria and other members from Africa, who are unhappy with revised production limits.

Saudi Arabia and its oil allies, it was learned, "are once again struggling with a dispute over output quotas for African members, forcing the group to delay," what a source tagged, "a critical meeting." 

Nigeria is ramping up its production targets ahead of a pivotal OPEC+ meeting set to decide on matters including how much oil Africa's biggest crude producer should aim to pump next year.

Nigeria was producing 1.7 million barrels per day of crude and condensates as of Nov. 17 and expects to hit 1.8 million bpd by the end of the year, Olufemi Soneye, the Chief Corporate Communications Officer, Nigerian National Petroleum Company Limited (NNPCL), said.

The country intends to ramp up its crude and condensate output to about 2 million bpd by the end of the first quarter of 2024, he said, adding that the aim is to reach 2.5 million bpd in the next couple of years. In a surprise move, the OPEC and its allies, a group known as OPEC+, on Wednesday delayed an upcoming ministerial meeting until November 30.

They had been expected at the meeting to extend or deepen output cuts in 2024, with oil prices falling considerably in recent weeks over demand concerns and burgeoning supply. According to OPEC+ sources, OPEC members Angola, Congo and Nigeria are struggling to agree on output levels and hence possible reductions ahead of the meeting originally set for November 26.

OPEC+ negotiations over production quotas have often been difficult in the past. This dilemma is borne out of the fact that oil production tends to vary month-by-month, making it difficult to fix  a permanent production target, so the higher a production reference level a country can negotiate, the less it actually has to cut to comply with its targets.

In a June OPEC+ meeting, the three African producers were given lower targets after years of failing to meet the previous ones. Nigeria saw its 2024 target reduced to 1.38 million bpd from 1.74 million previously, but it will be allowed a higher production target of 1.58 million bpd if three independent consultancies can confirm its capacity to produce at this level.