Nigeria, Angola Know Fate Today As OPEC+ Talks With African Producers  Over Production Downgrade


Nigeria, Angola, and some other African countries that are members of OPEC+ will today know their fate as regards quota downgrade by the group on account of the countries not being able to meet their production quotas.

African members agreed to quota cuts at the last OPEC+ meeting in June, following hours of tense negotiations, unless they could demonstrate higher production capacity according to third-party estimates by November.

While they believe they have done so, African producers are nevertheless on course for serious quota cuts, prompting disagreement and fears that investment in their oil sectors could be affected.

OPEC and its Russia-led allies will take one more stab at finalizing disputed production quotas for 2024, with Angola and Nigeria still holding out, as they prepare to convene online for a hastily rescheduled meeting Nov. 30, the day the UN’s COP28 Climate Change Conference begins in Dubai.

“Negotiations are still in progress,” one delegate said.

“Each country has its own internal strategy and commitments with international companies and then there is politics because there are specific messages you do not want to give to the market,” another delegate said.

Three sources said the meeting was still on course to go ahead, but some cautioned that a further delay could not be ruled out.

Ministers were set to convene in Vienna Nov. 26 at a time of extreme market volatility and poor economic indicators, which have depressed oil prices, as well as the wars in Europe and the Middle East.

Yet the meeting was postponed and then made virtual, largely due to disagreements over baselines, from which quotas are drawn up, for underproducing African members, including Angola, Equatorial Guinea, Nigeria and Republic of Congo.

Meanwhile, the UAE was handed a 200,000 b/d quota increase at June’s meeting, fulfilling a long-standing demand from the Gulf state.

As of late Nov. 28, sources said, members were working hard to get Angola and Nigeria — the final holdouts — over the line, with other African countries acting as go-betweens to leverage their regional ties.

Nigeria produced 1.46 million b/d in October, according to the monthly Platts OPEC Survey from S&P Global, well below its current quota of 1.742 b/d, due to underinvestment, technical issues at ageing fields and rampant crude theft by Niger Delta gangs.

The 2024 quota agreed in June — 1.38 million b/d — is below even current production. Officials, meanwhile, insist Nigeria can exceed 1.7 million b/d in 2024.

What number emerges in November, and the signal that sends to investors, has been causing consternation.


Angola produced 1.15 million b/d in October according to the Platts survey and will see its quota fall to 1.28 million b/d from 1.455 million b/d, according to June’s communique, giving it little room to boost production in 2024. Angola’s oil minister was poised to skip the first meeting when it was scheduled for Nov. 24. It was unclear if he will attend the virtual summit Nov. 30.

“Maybe there were some discrepancies with respect to the evaluation of some countries and this is a point that should be analyzed and understood, and we should listen to each country,” a delegate said. “You have to have dialogue to try to find a point of balance.”

African delegates said the process for baseline and quota changes had been unclear, despite the five-month lead time, with members unsure how the three external numbers, which could vary by each secondary source, would be interpreted.

“The Nigerian oil sector is struggling, as you see from the persistent gap between NUPRC production numbers and the OPEC quota,” said Clementine Wallop, senior adviser to political risk consultancy Horizon Engage.

“Though output is higher since President Tinubu took office, and though the government is allocating more resources to security in the Niger Delta, Abuja knows it still has much work to do, especially on crude theft and pipeline vandalism.’

Horizon Engage expected “modest output increases in 2024” in the West African country.

Clear tensions within OPEC+ come as the group struggles to stabilize the oil market, amid a global economic slowdown and expectations of a large supply surplus driven by rising output in non-OPEC oil producers.

The rescheduled meeting also falls on the first day of COP28 in Dubai, with oil producers keen to make a case of continued hydrocarbon development despite the global energy transition.

Meanwhile, Saudi Arabia, which announced a unilateral 1 million b/d cut in June after failing to convince other members to pump less, is now producing just 9 million b/d, and therefore might be unwilling to cut any more, reducing its hand in the negotiations.

OPEC+ has already pledged total oil output cuts of 4.96 million b/d since late 2022, including the 1 million b/d Saudi cut and a 300,000 b/d Russian export cut, which are both due to expire at the end of December. These cuts are reviewed monthly.

Most analysts say the cuts would need to be extended at the least to avert a further price slump, and the absence of a deeper cut could cause an immediate sell-off.

The Dated Brent benchmark has fallen from $97.77/b in late September to $81.99/b on Nov. 28, according to assessments by Platts, a unit of S&P Global Commodity Insights.

“Although the outcome of the Nov. 30 OPEC+ meeting is not known yet, we expect production cuts, including unilateral cuts by Saudi Arabia and Russia, will be prolonged into 2024 or even deepened,” said Jim Burkhard, vice president and head of research for oil markets, energy and mobility, S&P Global Commodity Insights.

“Absent such action, production will rise and so will the risk of much weaker oil prices.”

Source: S&P Global Commodity Insights with additional contribution

Leave a Reply

Your email address will not be published. Required fields are marked *