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OPEC will be looking to balance the oil market after crude oil prices hit their highest in four years, but the cartel’s options to manage the market could be limited by its spare production capacity, Nigeria’s representative at OPEC, Mallam Mele Kyari, told Reuters on Wednesday.
“It’s obvious that if you have high prices it’ll affect demand, so you have to do some market balance,” said Mele Kyari, who is also head of the crude oil marketing division at Nigerian National Petroleum Corporation (NNPC).
While OPEC will do everything to stabilize and keep the market balanced, there’s a limit to its options.
“You must have the spare capacity,” Kyari told Reuters.
Nigeria will aim to increase its own 0crude oil and condensate production by around 100,000 bpd by the end of this year, compared to around 2 million bpd in oil and condensate production currently, the official said.
Nigeria’s crude oil production alone jumped by 74,000 bpd from its July level to average 1.725 million bpd in August, according to OPEC’s secondary sources.
In the late spring and early summer, Nigeria’s production and exports were disrupted by outages of oil flows on pipelines feeding oil export terminals, and delays in cargo loadings. In June, there were disruptions to Bonny Light, Forcados, and Qua Iboe flows—all of which are key Nigerian crude grades.
But production has recently stabilized and Nigeria’s oil exports for October are expected to hit a four-month high at 1.73 million bpd, as grades are coming back online following pipeline outages in the summer, according to loading schedules that Reuters has seen.
According to Nigeria’s OPEC representative Mele Kyari, the country would aim for 2.3 million bpd average crude and condensate production in 2019, following the start-up of the Egina ultra-deep oil field later this year. Egina is operated by France’s Total and is expected to have production capacity of 200,000 bpd.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.