More oil possible from Libya, Nigeria, a report finds

Libya and Nigeria are two members of OPEC exempt from a multilateral agreement to curb oil production in an effort to balance an over-supplied market.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   July 6, 2017 at 8:49 AM
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July 6 (UPI) -- A report Thursday from oil pricing group Platts stated that more production is possible from OPEC members Libya and Nigeria, adding to supply-side concerns.

A survey of production from members of the Organization of Petroleum Exporting Countries by Platts found total group production rose 220,000 barrels per day between May and June. Total production last month was a six-month high for OPEC.

OPEC, with support from non-member state producers like Russia, is coordinating an effort to balance a lopsided market with managed production declines. Libya and Nigeria are exempt from the arrangement so they can support national security efforts with oil revenue.

Platts reported that Libyan oil production in June was around 810,000 barrels per day for its highest level in nearly three years. Nigerian production, meanwhile, reached 1.78 million barrels per day last month for its highest level since January 2016. Both countries have brought idled production back on stream this year.

"Further recoveries appear likely, as militancy has quieted in both countries for the moment," the report from Platts read.

The Libyan National Oil Co. signed an agreement with German energy company Wintershall in June that outlines a resumption of oil production from some of its license areas on an interim basis. At the time, NOC Chairman Mustafa Sanalla said that total production should hit the 1 million barrels per day mark by the end of July.

Shell Petroleum Development Company of Nigeria Ltd last month lifted force majeure, a contractual condition related to circumstances beyond the control of the parties involved, for exports from the Forcados terminal in Nigeria following repairs to an export artery.

Analysts estimated that Shell's announcement, which ended an export restriction that lasted more than a year, could lead to another 250,000 barrels per day from Nigeria.

Platts reported that pressure may be building on Libya and Nigeria to sign on to stemming production in order to keep the balancing effort relevant.

"The combined output of Libya and Nigeria is now about 380,000 bpd above their October level, the benchmark month from which OPEC based its 1.2 million barrel-per-day cut in its output agreement," the report read.

Members of a committee tasked with monitoring the agreement meet in St. Petersburg, Russia, in late July.

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