OPEC
Crisis rocks OPEC as Nigeria, Angola insist on flouting quota ceiling
A simmering crisis is rocking the Organisation of Petroleum Exporting Countries (OPEC) as it released its quotas with African members kicking to float the ceiling.
OPEC put Nigeria’s 2024 oil output quota at 1.5 million barrels per day, lower that the country’s budget estimate of 1.78 million bpd for next year by President Bola Tinubu-led administration.
Similarly, OPEC also lowered Angola’s target, according to a statement from the group of oil-producing countries.
The fallouts is consequent of a meeting in June where OPEC+ agreed a complex deal that revised production targets for several members.
OPEC had charged three consultancies – IHS, Rystad Energy and Wood Mackenzie – with verifying production figures for Nigeria, Angola and Congo.
Based on that, it has now given Nigeria a 2024 target of 1.5 million barrels per day, Angola 1.11 million bpd and Congo a target of 277,000 bpd.
The OPEC decision was based on assessments by the consultancies that Angola could produce 1.28 million bpd and Nigeria 1.38 million bpd and possibly as much as 1.58 million bpd.
It was discovered that both Nigeria and Angola have failed to meet previous quotas hurt by underinvestment and security issues.
Reuters had cited disagreements over African output quotas as a reason OPEC+ postponed its meeting scheduled for November 26.
Only on Thursday, Angola had expressed dissatisfaction with its 2024 output quota, indicating it would overshoot the limit.
Outrightly, Angola rejected new output quota handed to it by OPEC and said it planned to breach it, a rare challenge to the cartel that heralds more infighting ahead.
“We will produce above the quota determined by OPEC,” Angola’s OPEC governor Estevao Pedro said in an interview on Thursday.
“It is not a matter of disobeying OPEC; we presented our position, and OPEC should take it into consideration,” he said.
Indeed, Nigerian output has been in decline for years, but has now picked up helped by more production offshore, and may overshoot OPEC limit.
With this scenario, the stage is set for crisis in OPEC. Speculations are whether Angola would continue to remain in the OPEC because of its position of defiance, which brings back emories of Ecuador’s exit from the group. The South American producer said it would breach its quota in 2017, and eventually ended up leaving, Bloomberg said. OPEC members also embarked on cuts.
All eyes are now on the OPEC subset of the group — steered by heavyweight Saudi Arabia — will have mended its differences.
Sources told CNBC that west Africa’s largest member producers, Angola and Nigeria, were pushing back against lower baselines for next year — levels off which quotas are decided.
It remained to be seen how OPEC subset of the group — steered by heavyweight Saudi Arabia — will have mended its differences.
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