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.
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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.
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
