The Opec+ Joint Ministerial Monitoring Committee (JMMC) has declined an informal request from Nigeria to re-evaluate the baseline from which its crude output cuts are calculated.
Nigeria had asked for its baseline figure to be reviewed based on disagreements over the classification of output from the country’s Agbami field. Nigeria classifies the Agbami stream as condensate, but three of the six secondary sources whose estimates feed into Opec+ compliance levels — including Argus — count it as crude.
In a letter to Nigerian oil minister Timipre Sylva, Opec president Abdelmajid Attar said any attempt by any country to revise the Opec+ production restraint agreement would “constitute a huge risk that may lead to market collapse”, would create a “damaging mistrust in the credibility of Opec+”, and would “open up the possibility for other countries, including large producers, to request changes to their obligations”.
Attar’s letter stressed that oil markets remain under pressure from “huge oversupply” and that this, combined with the acceleration of the Covid-19 pandemic, could require Opec+ “to extend or deepen today’s production adjustments well into 2021”.
As things stand, the 19 Opec+ members participating in the deal are due to raise their combined crude production by around 2mn b/d from January, but renewed pressure on oil demand from a resurgence in Covid-19 cases and a strong recovery in production from deal-exempt Libya are putting pressure on Opec+ to rethink its plan.
The JMMC ended its meeting today without an immediate policy recommendation over how the group should proceed with its crude output cuts. Sylva was absent from the meeting, and the Nigeria request was not formally brought up.
Nigeria has been stepping up efforts to improve compliance with its Opec+ obligations in recent months. Argus estimates that its compliance averaged 109pc in August-October, up from just 65pc in May-July.
– Argus Media