Page 4 - LatAmOil Week 48 2019

LatAmOil COMMENTARY LatAmOil
The OPEC-plus group will hold its next meeting on December 5-6 (Photo: OPEC)
An uneasy year for OPEC
and its member states
NewsBase examines issues confronting two of the cartel’s member states in Africa and South America
WHAT:
OPEC is likely to discuss Nigeria’s non-compliance with quotas and Ecuador’s move to exit the group at its upcoming meeting.
WHY:
Nigeria may ask for more leeway on condensate, and Ecuador may slow its march toward the exit.
WHAT NEXT:
Brazil is not likely to make a formal bid for membership in the short term.
OPEC has not had an easy year. e organisa- tion’s e orts to stabilise the oil market – that is, its attempts to generate a little upward momen- tum in crude prices, which have been stub- bornly sluggish, by reining in production under a multi-lateral agreement that is due to expire on March 31, 2020 – have had limited success.
Many industry analysts are now describing the market as oversupplied. ey have asserted that conditions are unlikely to change for the better unless the cartel and its allies, known as the OPEC-plus group, endorse further output cuts at their next meeting in Vienna on Decem- ber 5-6.
ere is a certain amount of support for such cuts among the parties to the OPEC-plus agree- ment, since all of these states are keen to see their oil revenues rise. It remains to be seen, though, whether this view prevails, especially in light of weak demand. e Norwegian consultancy Rys- tad Energy, among others, has pointed out that the OPEC-plus group is not yet committed to extending the term of the output agreement, let alone revising it to mandate further reductions.
But the fate of the production quota regime isn’t the only topic slated for discussion later this week. e group is also sure to discuss a number of issues on a country-by-country basis. is article will examine a few of those issues, focus- ing on two OPEC member states in Africa and South America.
Nigeria’s compliance
IN sub-Saharan Africa, production levels are still a leading concern – particularly in Nigeria. The West African state has a long track
record of non-compliance with production quotas. For much of this year it has remained on
the same path, regularly exceeding its allotments
even a er being granted more leeway. OPEC
xed its quota at 1.685mn barrels per day in July
and then quickly raised it to 1.774mn bpd. It did
so with little fanfare, in response to pleas from Nigerian o cials who argued that the July g-
ure had been drawn up earlier in 2019, prior to
the launch of development work at the o shore
Egina eld. Egina, which lies in Nigeria’s deep-
water zone, is currently yielding 200,000 bpd. 
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w w w . N E W S B A S E . c o m Week 48 05•December•2019