Experts hopeful of waiver extension for Nigeria as OPEC decides oil outlook

As the Organisation of the Petroleum Exporting Countries (OPEC), and other non-members meet today, to decide on key policies, oil and gas analysts in Nigeria are optimistic that the country will get an extension of the waiver it is enjoying from current supply cuts in the market. But any negative outcome from the meeting and resumption of hostilities in the Niger Delta as being threatened, could spell doom for Nigeria, and hamper implementation of the 2018 budget, analysts told The Guardian yesterday. Nigeria has been enjoying waiver from OPEC’s supply cut, to curb free fall of oil prices but may come off that restriction soon, depending on OPEC’s decision today.

The meeting, which is expected to put Nigeria in the eye of the storm is predicted will be tough, as OPEC and non-OPEC members, especially Russia, may opt out of the intervention to stabilise oil prices through supply cuts. “Russia seems to have achieved what they wanted and there seems not be need for the supply cuts. Saudi Arabia wants market to be stable but if the supply cut is discontinued then market stability becomes a problem and everybody has to push for market share,” Head, Energy Research, Ecobank Limited, Dolapo Oni, said. Noting that OPEC no longer enjoyed the unity it once had, especially from non-members, Oni was optimistic that Nigeria would be granted extension of the waiver if OPEC adopts the option of extending current supply cut till end of 2018. “Nigeria and Libya do not want to be mentioned at the meeting.

They don’t want the issue of exemption mentioned. But if Russia is blanketed, Nigeria and Libya may have to join the cut. “If production stays at 2.1 million per barrel daily and we have to cut about 100 bbl, it is still okay for us as much as oil remains at above $60/barrel (bbl). But if OPEC takes the Russian option, and suspends the cut and every country including U.S. Shale starts production, then oil prices may return to around $40/bbl. This will make the budget implementation difficult for Nigeria,” Oni told The Guardian. Analysts have also raised concern that the country, which recently exited recession following gradual stability of oil prices, may have more to worry about over looming hostility by militants in the oil producing Niger Delta.

Although experts forecast that OPEC members would support the extension of the declaration on production cut till the end of 2018, on Tuesday, United Arab Emirates Energy Minister, Suhail bin Mohammed al-Mazroui, before leaving for OPEC meeting in Vienna, Austria, said: “It will not be an easy meeting, and we always look at various scenarios.”

(Guardian)