OPEC Agrees To 9-Month Extension Of Oil Production Deal

OPEC talks ended in Vienna on Thursday with an agreement to extend the production cut deal through the end of 2018, a delegate told Reuters.

According to earlier reports, while extending to end-2018, the cartel was said to have agreed to review that pact in June, ZeroHedge tweeted. However, Amena Bakr, Senior Correspondent at Energy Intelligence Group, tweeted later that a source had said that “Reports of the extension being reviewed in June are inaccurate.”

OPEC is now mulling whether to include Nigeria and Libya—the two producers exempt so far from the production cuts—in the pact. According to the Financial Times, OPEC is working on a deal that will include details about the production targets of the two African producers.

Nigeria’s Oil Minister Emmanuel Kachikwu told the FT that OPEC would likely impose some kind of “soft” targets on Nigeria and Libya on the basis of their respective average production this year.

“This doesn’t mean a carte blanche for Libya and Nigeria. This is where we are and what we are still discussing,” Kachikwu told the FT, speaking by phone from the sidelines of the OPEC meeting.

OPEC is now discussing ‘soft targets’ of around 1.8 million bpd for Nigeria and 1 million bpd for Libya, and talks continue on how to phrase those numbers as “indicative” and not include them as hard targets in the final OPEC statement, the Nigerian minister told the FT.

Meanwhile, non-OPEC South Sudan is studying the benefits of joining OPEC because it looks to double its oil production in 12 months from the current 135,000 bpd, Reuters quoted South Sudan Oil Minister Ezekiel Lol Gatkuoth as saying on Wednesday.

The meeting of OPEC and non-OPEC—which will be another interesting thing to follow given Russia’s reportedly less eager position on an outright extension to the end of 2018—has just started at the time of writing. This is the meeting at which OPEC and its kingpin Saudi Arabia and the leader of the non-OPEC nations, Russia, will have to hammer out the final details of the ‘Declaration of Cooperation’ like OPEC phrases the deal.

By Tsvetana Paraskova for Oilprice.com