The organization of petroleum exporting countries (OPEC) has agreed to extend its oil-production cuts for Nigeria and Libya to the end of 2018, adding that it would be subject to a review at its next scheduled meeting in June.
Nigeria was again lucky as delegates further agreed to impose caps on Nigeria and Libya such that it's above their current production. Reports from Vienna indicates that Nigeria was requested to cap its oil output at 1.8 million barrels a day, even as it is said to be currently producing 1.73 million barrels a day in October and Libya 980,000 a day.
Kuwaiti Energy Minister Issam Almarzooq had told journalist before the meeting that Libya was asked to limit output to about 1 million barrels a day.
Reacting to the further exemption, Minister of State for Petroleum Resources, Dr. Ibe Kachukwu said the country has resisted the word 'cut' in crude production.
He stated this while speaking to Bloomberg Television on the sideline. Answering question the minister said Nigeria has been cautioned to be disciplined and not flood global markets with crude.
"We've been asked to be disciplined, the word cut has not been used. We've resisted the word cut. The word cap has been accepted by me a long time ago," he said.
"Clearly, there is a continuing obligation to ensure that we do not just flood the market because of the exemptions we were given.
"There's a lot more energy around bringing everybody to the ball park, Nigeria is willing to be in that ballpark and contribute.
"Our contribution is fairly limited because we are still lacking yet in that capacity to reach the marks anywhere soon."
He said Nigeria's current production is around 1.75 million barrels per day and that the 1.8 million barrels benchmark is comfortable.
"Our current production is 1.75, we are still below the 1.8 that was the benchmark which is comfortable but you're going to see a lot more pressure as we go into next year.
"Sometime late next year, we will probably see the capacity of Nigeria to do close to 2.3, 2.5.
"Can we do it? Probably not if we all keep to discipline. We are now going to be looking at producers within our country and those giving us barrels at the least cost price because we are going to cut scientifically those who are unable to produce below a certain benchmark," he said.
There are indications that the OPEC's decision to peg the nation's crude product at 1.8 mbpd may affect the 2018 negatively as the country's budget was predicated on a benchmark oil price of US$44.5 per barrel, and oil production of 2.2mbpd. Experts are however optimistic that the rise in the price of the commodity may help bridge the gap in reduction in the production target.