By ANAS ALHAJJI
DEC 12
According to press reports, Nigeria was among the African countries that “delayed” the OPEC+ meeting from November 26 to November 30 over disputes regarding quotas and baselines for 2024. The dispute between Nigeria and OPEC/OPEC+ is over its ability to produce as well as the corresponding quota. Nigeria wants a higher quota because its officials think they will produce more in 2024.
Nigeria’s “quota” or “production target” was 1.74 mb/d in 2023. But Nigeria failed to deliver that amount. As a result, during the OPEC+ meeting last June, its quota was reduced by 324 kb/d to 1.38 mb/d for 2024. Nigeria was not happy with the reduction and has been asking for a higher quota since then. In November, it requested an even higher number. OPEC+ decided to enlist the help of independent companies to assess Nigeria’s ability to produce. Nigeria got an additional 200 kb/d. Its quota for 2024 now stands at 1.58 mb/d.
Looking at Nigeria’s potential and challenges, it could be the country that will surprise the market on the upside or the downside. But one fact is clear, given the right security and political conditions, it has the technical capability to be the only country in OPEC+ that can surprise on the upside within a short time frame. Nigeria has dormant oilfields, wells out of control, and a major theft problem. The volume of resources that are “lost” is significant. This loss (or at least a large part of it) can be recaptured if the Nigerians bring adequate security to the areas that need it.
Other countries like Iran, Libya, and Venezuela need massive investment and time to increase production. At the same time, the probability that their production drops by a significant percentage remains high.
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Russia has been determined to stop the US shale oil growth since 2014. But this is not the objective of OPEC in general. Neither Saudi Arabia nor OPEC wants to end the US shale growth. What they want is for all producers to share the growth in demand.
Saudi Arabia and the rest of OPEC benefited from the existence of shale. Just imagine a world with no shale oil production: that would be a chaotic world without the 9 mb/d that came from shale starting in 2010. Saud Arabia experienced mounting political pressures in 2007 and 2009 to increase production and capacity as world oil supplies dwindled.
Saud Arabia, specifically, benefited financially from shale. When the US started exporting oil, and after the Obama administration lifted an export ban on US-produced oil towards the end of 2015, VLCCs owned by Saudi Arabia’s National Shipping Company, Bahri, were loaded with US light sweet crude for China, India, and other oil consumers.
While some giant producers like Saudi Arabia have gained from the US shale revolution, Russia has been determined for years now to end the shale growth.