Oil Cut Violation: Nigeria Gets December Deadline

By Adedapo Adesanya

Nigeria and other oil-producing countries that exceeded their crude production quotas in recent months have been given till December 2020 to compensate, rather than having to conform by the end of September.

This decision was taken at the Joint Ministerial Monitoring Committee (JMMC) meeting of a coalition of oil producers on Thursday. The team agreed to extend the deadline by three months.

“The JMMC supported, and recommended, to the OPEC and non-OPEC Ministerial Meeting, the request of several underperforming participating countries in the Declaration of Cooperation to extend the compensation period till the end of December 2020, after pledging that they will fully compensate for their overproduction,” a statement issued after the meeting said.

The committee of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, known as (OPEC+), also made no recommendation to change existing quota as it pushed for full compliance.

The committee said compliance with agreed cuts stood at 102 per cent in August, including Mexico, which is no longer formally participating in the cuts. OPEC+ reached 101 per cent conformity last month without Mexico.

In August, Nigeria, alongside fellow laggard, Iraq, made efforts to compensate for their overproduction but due to past overproduction and underperformance, the country will now be able to extend the period of compensation till the end of the year.

OPEC+ agreed in April to cut their output by a record 9.7 million barrels per day in May and June to offset a slump in demand and prices caused by the coronavirus crisis. The deal was later extended to July. From August, oil cuts were reviewed downward to 7.7 million barrels per day until the end of the year.

Thursday’s meeting came against the backdrop of worsening demand forecasts as indicated in its monthly report. The organisation said it expects the global oil demand to fall by 9.46 million barrels per day this year, more than the 9.06 million barrels per day decline expected a month ago.