No Pushback From Nigeria As OPEC’s 1.5m bpd Quota Falls Short of 1.78m bpd Budget Production Benchmark 

After intense negotiations that lasted several days, the Organisation of Petroleum Exporting Countries (OPEC) on Thursday handed Nigeria a 2024 oil output target of 1.5 million barrels per day.

It was significantly lower than Africa’s largest oil producer had hoped for. The Bola Tinubu-led administration had during the week pegged crude oil output at 1.78 million bpd for next year.

OPEC also lowered Angola’s target, according to a statement from the group of oil-producing countries.

The move followed a meeting in June where OPEC+ agreed to a complex deal that revised production targets for several members.

OPEC had tasked 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.

In June it had been agreed, pending the 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.

Both have failed to meet previous quotas hurt by underinvestment and security issues.

Disagreements over African output quotas were cited by sources as a reason OPEC+ postponed an in-person OPEC+ meeting scheduled for November 26, until on Thursday, Reuters said.

Angola on Thursday was unhappy with its 2024 output target and does not plan to stick to it, Bloomberg reported.

Nigerian output has been in decline for years but has picked up in recent months helped by more production offshore, which is less prone to security problems, two analysts said.

Still, Nigeria’s own targets of hitting 2 million bpd in crude and condensate output next year are more optimistic than realistic, they said.

According to Rystad’s calculations, under its base case scenario Nigeria can expect to see crude output rise to 1.5 million bpd next year assuming no further disruptions.

Meanwhile, Angola rejected the 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.

A spat over African members’ quotas delayed the latest OPEC meeting by four days, and a decision was finally reached on Thursday. But after a review — pledged back in June after another fraught meeting in which the Africans lost out to other members — Angola has been handed a quota it doesn’t think is fair.

Angola, Africa’s second-largest crude producer, will pump 1.18 million barrels a day from January, Pedro said, above the 1.11 million quota set out in the OPEC agreement on Thursday.

In June, Angola, Congo and Nigeria were pushed by Saudi Energy Minister Prince Abdulaziz bin Salman to accept reduced output targets for 2024 that reflected their diminished production capabilities.

The deal in June was only reached after the countries were promised an audit. But the review reflected lower capacity — and as a result a lower quota.

Pedro said last week that the country would remain an OPEC member despite the dispute. On Thursday, he sounded less sure.

“The question of whether Angola remains in the OPEC is a decision at the highest level of authority,” he said.

The defiance will bring back troubling memories 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.

“The OPEC Secretariat noted the announcement of several OPEC+ countries of additional voluntary cuts to the total of 2.2 million barrels per day, aimed at supporting the stability and balance of oil markets.

“These voluntary cuts are calculated from the 2024 required production level as per the 35th OPEC Ministerial Meeting held on June 4 2023 and are in addition to the voluntary cuts previously announced in April 2023 and later extended until the end of 2024.

“These additional voluntary cuts are announced by the following OPEC+ countries: Saudi Arabia (1,000 thousand b/d); Iraq (223 thousand b/d); United Arab Emirates (163 thousand b/d); Kuwait (135 thousand b/d); Kazakhstan (82 thousand b/d); Algeria (51 thousand b/d); and Oman (42 thousand b/d) starting 1st of January until the end of March 2024.

“Afterwards, in order to support market stability, these voluntary cuts will be returned gradually subject to market conditions,” an OPEC statement said.

The above, it said, will be in addition to the announced voluntary cut by the Russian Federation of 500,000 barrels per day for the same period (starting 1st of January until the end of March 2024), which will be made from the average export levels of the months of May and June of 2023.

OPEC added that this will consist of 300,000 barrels a day of crude oil and 200,000 barrels per day of refined products.

“In accordance with the decision of the 35th OPEC and non-OPEC Ministerial Meeting, the completion of the assessment by the three independent sources (IHS, Wood Mackenzie and Rystad Energy) for production level that can be achieved in 2024 by Angola, Congo and Nigeria as follows: Angola at 1,110 t/bd, Congo at 277 t/bd and Nigeria at 1,500 t/bd,” an earlier statement by the cartel stated.

Emmanuel Addeh in Abuja

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