Nigeria’s Exemption From More Crude Cuts, Inevitable – Kachikwu

The Minister of State for Petroleum Resources, Dr IbeKachikwu, has said Nigeria would get more crude-cut exemption from the Organisation of Petroleum Exporting Countries (OPEC).
Nigeria has been exempted twice, the first time for six months and the second time for nine months, from the OPEC decision to cut crude production to shore up prices of the product.
Kachikwu, who made this known at a media interaction in Abuja, said that at the expiration of Nigeria’s crude-cut exemption in March, 2018, further exemption was inevitable.
He said that it was magnanimous of his OPEC colleagues to have understood that the government came in with difficulties and voluntarily gave the exemption but that market stability was an issue.
“So, the question is when do we join but I will recognise stability if I can consistently say that for at least six months, I’ve seen average daily productions that are within the umbrella of 1.8 million barrels.
“The market is still topsy-turvy; today I think we are around 1.6 million barrels per day (bpd).
“A lot of days we are slightly above 1.8 million barrels because of the understanding with our Niger Delta brothers.
“OPEC has no intention of giving an extension taking it back, but it shouldn’t take the butchering of my pipelines to get an exemption.
“I have obviously a mark of March, next year; if I need to draw it up to that point, I will.
“If my numbers are not showing stability (but if we are fine before then) and stability arises (but this is already September so March is really six months).
“It’s very unlikely that I can see stability that convinces me with certainty and predictability that I should exit the exemption between now and March,” he said.
The minister said that he wouldn’t do anything to jeopardise OPEC’s rules.
“We are going to be very transparent on this; I was the ex-OPEC President, we have the OPEC Secretary-General from Nigeria.
“So, my intent definitely cannot be to play games with this but at the same time we have to be very realistic.
“We are committed to the OPEC position; we are committed to the cut principles. We’ll do our best to align as soon as our colleagues begin to feel that we are stable enough.
“I, however, found working with Russia, working with Saudi Arabia and all the other OPEC members that they usually will be very honest in terms of looking at the data.
“They have their own secondary sources to determine what it is that we produce and they are able to see what the numbers are,” he said.
He said the nation was undergoing massive problems in terms of liquidity, income, predictability and financing of projects.
“This period enables us to get our act together and make sure all the things we need to do in the Niger Delta are done.
“People have a much firmer promise to remain stable, not attack our pipelines and we can predict our volumes day-to-day much more determinedly.
“We are seeing incidences of that begin to return but we still have these flip-flops,” Kachikwu said.
He reiterated that Nigeria was given the 1.8 million bpd maximum production, adding that technically, it would not change.
“We won’t be cutting from the 1.8 million but bear in mind that our production is 2.2 million barrels even though we’ve now moved condensates out of it.
“So, the exemption was that we’ll not exceed 1.8 million so anything above 1.8 million we’ll cut, not including condensates.
“When we finish repairing our infrastructure, our capacity is going to be huge.
“I think this country has potential capability to raise production to 2.5 million barrels so there will be quite some sacrifices that we will have to make to align ourselves with everybody.
“But capacity is one thing and ability to build on this capacity is another thing, so it’s still work in progress.”
On pipelines that were damaged, Kachikwu said it would take a while to restore them.
“Some damaged facilities have been repaired, some gone through an aging process and therefore going through natural altrusions as a result of so much impact of the militancy attacks.
“So, it’s not so much now day-to-day attack but the solvability of the infrastructure that was damaged during those periods.
“It requires money, we don’t have straight money to put that in place so you see all those effects that go into determining stability in the oil industry,” he said.