Economy Maritime

OPEC to impose ‘soft target’ on Nigeria, says Kachikwu

Written by Maritime First

…Don’t go on strike now, NNPC boss appeals to IPMAN***

Minister of State (Petroleum) Ibe Kachikwu yesterday hinted of plans by the Organisation of Petroleum Exporting Countries (OPEC) to impose some kind of “soft” targets on Nigeria and Libya on the basis of their average production this year.

He was quoted by Financial Times  as saying on the sidelines of the ongoing OPEC meeting in Vienna, Austria that OPEC was discussing “soft targets” of around 1.8 million bpd for Nigeria and 1 million bpd for Libya, and talks continued on how to phrase those numbers as “indicative” and not include them as hard targets in the final OPEC statement.

Iran’s Oil Minister Bijan Zanganeh said OPEC is bringing Libya and Nigeria- the exempt members – into the fold with contributions to the efforts to erase the oversupply. He said the two African producers had agreed to cap their production at a collective level of less than 2.8 million bpd.

A delegate told Reuters that OPEC talks ended in Vienna with an agreement to extend the production cut deal through the end of 2018.

Going into the meeting, OPEC was expected to review the production numbers and targets of Libya and Nigeria, but, according to sources and analysts, it was uncertain whether the cartel would impose quotas or caps on the two African producers due to the still-tentative recovery and possible return of sudden outages due to militancy.

Still, some kind of ‘loose’ or ‘soft’ targets were being aired as a possible outcome.

Even though Libya and Nigeria have higher production targets than the recent highs of their production at 1 million bpd and 1.8 million bpd,  they face security, technical, and financial constraints in growing production much higher.

Still, the fact that the two African countries agreed to cap at recent highs, not at the higher production targets, is a significant sign that they have been asked or persuaded to contribute to the deal, at least in some form.

OPEC and its partners, including Russia, agreed to extend oil-production cuts to the end of 2018 and included Libya and Nigeria in the deal for the first time.

Iraq’s Oil Minister Jabbar Al-Luaibi confirmed the decision after a day of talks that reflected a rare consensus between members of the Organisation of Petroleum Exporting Countries and its allies. All agreed that the market is moving in the right direction, but is not yet balanced.

After some initial hesitation, Russia supported the accord that will result in nations accounting for more than half the world’s oil supply restraining output for two years.

Russia had previously sought assurances on how and when the agreement would be phased out, people involved in negotiations said earlier this week. The country needs greater clarity than most OPEC members because its economic policy making is more complex, including a floating exchange rate that fluctuates with the oil price.

It will be premature to talk about an exit strategy because OPEC and its allies are relying on oil demand in the third quarter of 2018 to finally eliminate the inventory surplus, Saudi Oil Minister Khalid Al-Falih said before the meeting. But the kingdom is open to discussions about how the group could wind down the cuts “very gradually” once its goals are achieved, he said.

OPEC ministers didn’t have a detailed discussion about the mechanism that will be used to review the deal in June, Zanganeh told reporters. He also said Nigeria and Libya had agreed to a collective output cap of 2.8 million barrels a day. Nigeria pumped 1.73 million barrels a day in October and Libya 980,000 a day, according to data compiled by Bloomberg.

In the meantime, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Baru has appealed to Independent Petroleum Marketers Association of Nigeria (IPMAN), not to embark on their proposed strike action on Dec.11.

Baru made the appeal during the commissioning of the NNPC Ultra-Mega Station in Shagamu, Ogun State.

IPMAN Lagos Chapter on Nov.29 threatened to withdraw its services from Dec. 11 over NNPC’s breach of bulk purchase agreement to sell fuel to them at N133.28k per litre.

The association, in a statement  signed by its state Chairman, Alhaji Alanamu Balogun, Vice Chairman, Mr Gbenga Ilupeju and the Secretary, Mr Kunle Oyenuga, said it was set for a showdown with NNPC over irregular fuel supply at Ejigbo satellite depot.

The GMD said that this was not the right time for the independent marketers to embark on strike.

According to the GMD, as the sole importer of petroleum products, the corporation is distributing the products according to Petroleum Products Pricing Regulatory Agency (PPPRA) template of N131 per litre.

He said there was no reason for marketers to sell above the pump price of N145 per litre.

“If some marketers are selling above the approved PPPRA template at depots, we will leave it for relevant regulatory agencies to seal them up.

“They know the implication of going on strike now.

“I will advise them to report any member of Depot and Petroleum Products Marketers Association (DAPMAN) that sells at N141 per litre to relevant regulatory agencies to take action,” he said.

He said the corporation had about 35 million litres of petrol for daily consumption and a reserve of over one billion litres for Christmas and New Year Celebration.

The GMD urged motorists against panic buying, adding that the corporation had what could last for over 30 days in stock.

Baru said the Ultra-Mega station was the first of its kind in the country.

He said the state was the only state in the country with two mega stations.

The GMD said Ogun had always played a major role in the economic development of the nation.

Otunba Gbenga Ashiru, the Ogun Commissioner of Commerce and Industry assured the NNPC boss that state would give adequate protection to the mega station.

Ashiru said Ogun State was one of the safest state in the country.

He said the location of the station on Lagos Ibadan express way was a good one because the road is the busiest in the country.

The Commissioner said the mega station would provide commerce and job for the indigenes of the state.

Mr Adeyemi Adetunji, the Managing Director, NNPC Retail Ltd. said the commissioning marked another milestone in the resolve of the GMD and NNPC top management to increase its footprint in the downstream petroleum industry.

According to him, this will ensure adequate supply of premium petroleum products to the good people of Nigeria.

”We are launching our first Utra-Mega Station within our network which will serve the immediate community and travellers commuting to and from western parts of the country.

“You will agree with me that the commissioning of this station will go a long way in ensuring  NNPC Retail Ltd actualizes its mandate.

“The station has 22 nozzles that made up of 14 petrol, four diesel and four for kerosene.

“It is bigger in size than previous stations and designed to serve a larger number of customers,” he said.

Additional report from Nation

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Maritime First