OPEC Urges Libya, Nigeria to Join Oil Output Cuts`

SEATTLE (Oil Monster): Libya and Nigeria could be key elements in an OPEC output agreement this week as other members are pushing to rescind the two countries' exemptions from production cuts and have them join the rest of the organization's efforts to ward off a supply glut.

Neither country seems keen to do so, citing their continued security risks, but having boosted their crude output significantly over the last two years, their pleas may be falling on deaf ears. Delegates told S&P Global Platts that they will be asking Libya and Nigeria to accept a production cut quota if OPEC can reach a new supply accord when it meets Thursday in Vienna.

"We are hopeful that they will come around this time and understand that everyone has to cut together," an OPEC delegate said, asking not to be named because of the sensitivity of the discussions.

The delegate added that both countries had made significant improvements to their production since the current deal went into force in January 2017, and it was time for them to "contribute."

Libya and Nigeria, both suffering from internal disruptions, were not given quotas when OPEC and 10 non-OPEC allies instituted 1.8 million b/d in cuts that are set to expire at year-end.

Production from Libya has surged 520,000 b/d, or more than double, from the October 2016 baseline on which the cuts were based, while Nigerian output has risen 210,000 b/d, or 13%, according to S&P Global Platts OPEC survey data, though both have had volatile swings.

"Both countries remain hotspots of uncertainty and are by definition to a large extent still wildcards," said Stephen Brennock, an analyst with brokerage PVM Oil Associates.

Saudi energy minister Khalid al-Falih, OPEC's de-facto leader, has in recent weeks traveled to Libya and Nigeria to press them on the exemptions, though no public commitments have been announced.

Falih, after meeting with Nigerian counterpart Emmanuel Kachikwu in Abuja last month, said some OPEC members "were complaining" in the summer that the two countries were "overproducing" and contributing to rising OPEC production.

"We have seen a great deal of stability and consistency, both operationally and, more importantly, in terms of security and bringing the sector back to normal," Falih said.

Kachikwu has not spoken to reporters since arriving in Vienna ahead of the OPEC talks, and a Nigerian delegate declined to comment. Mustafa Sanalla, the head of Libya's National Oil Corp, who will be representing Libya at the OPEC meeting, is scheduled to arrive in Vienna later Wednesday.

Courtesy: www.spglobal.com