Nigeria compliant with OPEC+ cuts but will pump more condensate: NNPC - S&P GLOBAL
JANUARY 13, 2021
Author Dania Saadi Eklavya Gupte
Editor Kshitiz Goliya
Nigeria implementing OPEC+ 'compensation cuts'
Will develop new condensate assets
Condensate to make up for reduced crude output
Dubai — Nigeria is complying with OPEC+ curbs and has implemented so-called "compensation cuts" but will pump more condensate to make up for the reduced crude production, managing director of state energy firm Nigerian National Petroleum Corp., Mele Kyari, said Jan. 13.
"We are in conformity including the compensation cuts," Kyari told the Global UAE Energy Forum 2021 organized by Gulf Intelligence.
OPEC+ had called on Nigeria to implement compensation cuts of 283,000 b/d from August through to December 2020 to make up for overproduction in previous months.
Nigeria pumped 1.43 million b/d in December, below its 1.495 million b/d quota, according to the latest S&P Global Platts OPEC+ survey. December production was 70,000 b/d down from November and its lowest level since August 2016.
It was Nigeria's highest-ever compliance since the OPEC+ alliance began its output deal in 2017, according to the survey.
This was mainly due to production issues caused by a fire at the Qua Iboe terminal, from which one of Nigeria's main crude grades is exported.
Nigeria, however, plans to produce more condensate to make up for its tumbling crude oil production, Kyari added.
"We have no difficulty remaining compliant. What we are doing different today is to increase our sources of condensate supply which is not curtailed by the OPEC+ cut," he said.
"We are looking at new assets that could produce more condensate into the market."
But industry sources have seen both crude and condensate production fall sharply since 2019 when Nigeria's exemption was removed and it had to start curbing output under the OPEC+ deal.
Nigeria's crude and condensate production slumped to around 1.66 million b/d in 2020 from 2.04 million b/d in 2019, according to Platts estimates.
This was its lowest annual output figure since 2016 when militancy in the Niger Delta pushed output to as low as 1.60 million b/d.
The improving compliance has, however, come at a big cost for Africa's largest oil producer.
President Muhammadu Buhari recently admitted that the country has been suffering heavily following a sharp drop in output and depressed global oil prices.
Nigeria's full compliance to the OPEC+ deal has been contingent on a key oil grade being treated as a condensate.
The current output cuts by OPEC and its nine non-OPEC allies are focused on crude and not condensate.
But the categorization of Nigeria's Agbami grade continues to be a bone of contention.
Nigeria's oil ministry insists it is a condensate but international oil companies like Chevron and Equinor, which have equity in the deepwater Agbami field, continue to classify it as an ultra-light crude.
Agbami has an API of over 47.9 degrees and a sulfur content of 0.04%, with production averaging 150,000 b/d in 2020, according to Platts estimates. Agbami is a popular grade among global refiners, and is regularly exported to a wide array of countries like India, Australia, Spain, the Netherlands, China and Brazil.
Platts, one of the secondary sources that monitors compliance, includes Agbami in Nigeria's crude oil figure as it is marketed as a crude export blend and not a condensate by NNPC and international oil companies.