Nigeria cuts oil production by 1.4m daily to make up for oversupply

Nigeria will compensate for cheating on its output cut agreed with OPEC and its allies including Russia by 1.4million to make up for overproduction in May.

Bloomberg reports that the 23-nation alliance’s latest deal, agreed over the weekend, is based on promises from Africa’s biggest producer and others such as Iraq and Angola make up for disregard of output quotas in May.

The agreement will see up to 10 million barrels a day of output until at the least of July to offset the demand hit from the coronavirus and prop up prices.

Mele Kyari, NNPC group managing director told Bloomberg that by the end of June Nigeria would have complied fully and in the worst case scenario, it will happen in the first half of July.

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According to Kyari, Nigeria will cut supply by as much as 45,000 bpd in the third quarter and that it overproduced by 100,000 barrels a day in May.

The OPEC+ deal in April required Nigeria to pump no more than 1.41million bpd in May and June, and 1.50million in the second half of the year.

Full compliance for Nigeria is difficult for a country facing fiscal crises following the devaluation of the naira. The economy is forecast by the World Bank to contract 3.2 percent in 2020, which would be its worst performance since the 1980s.

Oil prices have begun a slow recovery and doubled since late April to about $40 a barrel

Isaac Anyaogu

Isaac Anyaogu is an Assistant editor and head of the energy and environment desk. He is an award-winning journalist who has written hundreds of reports on Nigeria’s oil and gas industry, energy and environmental policies, regulation and climate change impacts in Africa. He was part of a journalist team that investigated lead acid pollution by an Indian recycler in Nigeria and won the international prize - Fetisov Journalism award in 2020. Mr Anyaogu joined BusinessDay in January 2016 as a multimedia content producer on the energy desk and rose to head the desk in October 2020 after several ground breaking stories and multiple award wining stories. His reporting covers start-ups, companies and markets, financing and regulatory policies in the power sector, oil and gas, renewable energy and environmental sectors He has covered the Niger Delta crises, and corruption in NIgeria’s petroleum product imports. He left the Audit and Consulting firm, OR&C Consultants in 2015 after three years to write for BusinessDay and his background working with financial statements, audit reports and tax consulting assignments significantly benefited his reporting. Mr Anyaogu studied mass communications and Media Studies and has attended several training programmes in Ghana, South Africa and the United States