Friday, March 29, 2024 | Ramadan 18, 1445 H
broken clouds
weather
OMAN
23°C / 23°C
EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Libya and Nigeria still on slow oil recovery path

953984
953984
minus
plus

When Opec reached a deal last year to cut oil output, the decision to exclude Nigeria and Libya from the restrictions was seen as a risk to the group’s efforts to curb a global crude glut.


An oil price rally has already stumbled since the deal, but Nigeria and Libya are not to blame. Output from both nations has slipped since December and violence in the two African states makes their ambitions to hike production look optimistic.


“The success of these cuts, debatable as they may be, will not hinge on Nigeria and Libya,” said ING analyst Hamza Khan.


Opec members and non-Opec producers agreed to cut output by 1.8 million bpd for six months from January 1. Opec has broadly cut the amount pledged, while others have not delivered in full.


After rallying above $58 a barrel in January, Brent has now slipped to around $51, under pressure from bulging US inventories and rising US shale production.


Since the Opec deal, Libyan production has dipped to 615,000 barrels per day (bpd) from 630,000 bpd in December, as militias battle to control export sites in the east of the country. Libya was producing 1.6 million bpd in 2011.


In Nigeria, militant attacks in the oil-producing Niger Delta have hobbled output, forcing the closure of the Trans Forcados Pipeline for all but a few weeks since February. Maintenance on the Shell-operated Bonga field has also weighed.


Nigerian output in March is now expected to be about 1.43 million bpd, down from 1.54 million bpd in December, after February’s brief rise to 1.65 million bpd. Nigeria is chasing a target of 2.2 million bpd, last achieved in 2012, according to calculations.


Morgan Stanley forecasts Libyan production could rise to 900,000 bpd in the second half of 2017, while Nigeria could produce 1.6 million bpd in the same time frame. But the US bank says unrest could undermine both those targets.


“It is possible that unplanned disruptions increase further,” Morgan Stanley said in a March 10 research note.


Libya’s prospects look particularly unpredictable. Since Libyan leader Muammar Gaddafi was toppled in 2011, the North African nation has fractured as militias battle for power.


“With three rival governments, extremely weak state institutions, and an abundance of armed actors, Libya is anything but a stable and reliable producer,” Royal Bank of Canada analysts wrote in a note.


In Nigeria, industry sources have said that repairs are nearing completion on the Trans Forcados Pipeline, which could swiftly add 250,000 bpd to output.


But attacks have repeatedly put the pipeline out of action and could do so again if peace talks with militants seeking a bigger share of oil revenues fail.


Even if Nigeria and Libya deliver on production goals — adding a combined 550,000 bpd, based on the most optimistic forecasts — it will still pale compared to the challenge Opec faces from US shale oil producers, who are adding capacity.— Reuters


SHARE ARTICLE
arrow up
home icon