Nigerian Minister of State for Petroleum Resources, Emmanuel Kachikwu, has said the country is in support of a six-month extension of the current quota restriction in oil production by OPEC and its allies.
He said OPEC would maintain production quotas after June if other suppliers boost output and the market remained as it was, though the group was likely to scale back cuts if supply tightened, Kachikwu said. “There definitely will be some quotas” after June, he said. Slower growth in oil demand is “worrisome.”
The minister told Bloomberg Television in Saudi Arabia just as the United States of America has vowed to enforce sanctions on Iran and would not extend the waivers given to those lifting its crude oil come May 1st, 2019.
What this means is that if the production cut extends by six months the price of crude oil would continue to increase at the international market and thereby putting pressure on Nigeria which is a net importer of petroleum products, despite the fact that it is a major oil producer. The price of crude oil as at weekend stood at $75 per barrel.
However- Saudi Arabia’s energy minister said the world’s biggest oil exporter saw no need to take immediate action in the crude market, signalling a cautious response to the U.S. decision to tighten sanctions on Iran.
The kingdom won’t significantly raise output in May and will stay within its OPEC production limit until the group’s current supply deal expires in June, Khalid Al-Falih said Wednesday in Riyadh. That would allow for a modest increase in production because Saudi Arabia currently pumps about 500,000 barrels a day below its quota.
“We will see what the customers want,” Al-Falih told reporters. “I think our intent is to remain within our voluntary production limit, but at the same time to be responsive to our customers, especially those who have been under waivers, and those waivers have been withdrawn.”
At the same time, Saudi Arabia is leading OPEC and allied producers in cutting supplies to try to buttress crude and avert a glut. If the kingdom boosts production sharply to offset missing Iranian barrels, it will have a hard time persuading others to limit output. OPEC, including Iran, plans to meet in June to decide whether to extend production curbs into the second half of the year.
“We allocated May, and the program is set — the ships are scheduled — so I think there will be very little variation in May production from the last couple of months,” Al-Falih said.
Saudi oil shipments for June will be allocated early next month, he said. “We think there will be an up-tick in real demand, but certainly we’re not going to be pre-emptive and increase production pre-emptively because the market is well-supplied and inventories continue to rise.”
Meanwhile Khalid bin Abdulaziz Al-Falih, the Minister of Energy, Industry and Mineral Resources of the Kingdom of Saudi Arabia, has expressed the strong readiness of his country to sign a Memorandum of Understanding (MoU) with Nigeria.
The Saudi Energy Minister communicated the blessings of the King of Saudi Arabia, Salman bin Abdulaziz Al Saud and the Crown Prince, H.R.H. Mohammed bin Salman bin Abdulaziz Al Saud for the partnership investment while announcing their readiness to sign the MoU with the Nigerian President, Muhammadu Buhari. The early draft of the MoU that will solidify the new oil and gas development partnership between Nigeria and Saudi Africa will be ready in the first week of May, 2019.
The agreement will in principle open the doors for Nigeria to potentially benefit from Saudi Arabia’s and effectively, Saudi Aramco’s recent aggressive oil-sector investments across the globe. Areas of interest will cover existing refinery revamp, building of a brand new refinery, LNG investments and product supply trading in crude and refined products.
Olusola Bello
