- Â OPEC nearing deal to extend oil cut to March 2018
Ejiofor Alike with agency reports
The Chief Executive Officer of Oando Energy Resources Inc., Mr. Pade Durotoye, has stated that the worst disruptions of Nigeriaâ€™s oil and gas infrastructure are over, and that the countryâ€™s production could reach 2.2 million barrels per day by the end of June.
This is coming as the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC ministers wednesday moved closer to clinching a deal on extending output cuts by nine months to clear a global stocks overhang and prop up the price of crude.
Addressing the Africa Independents Forum in London yesterday, Durotoye said the long-closed Forcados oilfield could be back to capacity by the end of June, enabling the country to return to nearly full production.
â€œWe think that the worst is behind us,â€ Durotoye said. â€œBefore the end of June, we will have Forcados back, which would take us comfortably back to 2.2 million bpd,â€ he added
Reuters reported that the first Foracdos cargo from the main Trans Forcados export line loaded last week, though Shell has said force majeure remains in place.
Durotoye said â€œbold actionsâ€ by the government to address security in the area had helped, and that if it continued, Oando could boost output from 50,000 bpd to 150,000 bpd within 12-18 months.
However, Durotoye said concerns over more violence were leading investors to view the oil-producing region with a lot of caution.
â€œCapital is still going to be constrained,â€ Reuters quoted Durotoye as saying.
Durotoye also said the long-delayed Petroleum Industry Governance Bill could be passed into law before the end of the second half of this year.
â€œWe expect approval sometime in the second half of the year,â€ Durotoye said.
On the uncertainty over fiscal terms, which has held back upstream investment, especially in capital-intensive deepwater offshore, Durotoye said that PIB approval would â€œput some (investor) concerns to bed.â€
In a related development OPEC and non-OPEC ministers yesterday moved closer to clinching a deal on extending output cuts by nine months.
OPEC will meet in Vienna, Austria, today to consider whether to prolong the accord reached in December in which OPEC and 11 non-members agreed to cut oil output by about 1.8 million barrels per day in the first half of 2017.
The market sees an extension by nine months as the base-case scenario since OPECâ€™s de facto leader, Saudi Arabia and top non-member, Russia said they favoured such a move.
Saudi ally, Kuwait said yesterday that OPEC could discuss deepening the cuts, in what would come as a positive surprise for market bulls, but hopes quickly faded after a key committee recommended keeping the curbs unchanged.
A ministerial committee comprising OPEC members Algeria, Kuwait, Venezuela, current OPEC president Saudi Arabia and non-OPEC producers Russia and Oman said in a statement it had recommended extending the cuts by nine months to March 2018.
Saudi Energy Minister, Khalid al-Falih gave the thumbs up when asked whether the committee had agreed on a nine-month extension.
â€œBefore the end of the year, prices may go above $55 a barrel,â€ Algerian Energy Minister Noureddine Boutarfa told Reuters before the committee meeting, saying an extension by nine months should help clear the glut by the year-end.
Most OPEC ministers including Iraqâ€™s have already voiced support for extending cuts by nine months.
Iranian Oil Minister, Bijan Zanganeh, who was due in Vienna, later yesterday, said extensions of six or nine months were possible.
OPECâ€™s cuts have helped push oil back above $50 a barrel this year, giving a fiscal boost to producers.
Delegates from Kuwait, Algeria, Ecuador and Mexico had on Tuesday stated that they supported extended output cuts.
Kuwaitâ€™s oil minister, Essam al-Marzouq, said, â€œWe agree on the need to do whatever is necessary to restore balance to the oil market.â€
Oil prices settled a bit higher yesterday, with Brent crude trading at $54.15 per barrel, while the US light crude traded at $51.47, as expectations of an extension to OPEC-led supply cuts overshadowed a White House proposal to sell half of US petroleum reserves.