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Nigeria will work to improve compliance with OPEC+ cuts: Esan

Vienna — Nigeria, whose crude production exceeds its quota under an OPEC/non-OPEC supply accord, is working to improve its compliance, its OPEC representative, Folasade Yemi Esan, said Monday.

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But Esan left open the possibility that Nigeria could receive a higher quota when OPEC ministers meet later in the day to decide the future of the 1.2 million b/d supply cut agreement, which expired Sunday.

Sources had told S&P Global Platts that Nigeria and South Sudan could request looser production ceilings. Nigeria had been exempt during the first two years of the OPEC/non-OPEC production cuts, due to the volatility of its output stemming from disruptions in the Niger Delta, only receiving a quota for the current round of cuts, which went into force in January.

"A higher quota is not the essence,” Esan said at a press conference held at the OPEC secretariat. "If we wanted higher quotas, we would not have exited the exemption.”

But later, pressed on whether Nigeria would keep its output cap of 1.69 million b/d under the deal, she said: "We are working very hard to keep that ceiling, but if for any reasons the ceiling is increased, we will keep to whatever ceilings we get.”

Nigeria, Africa's largest producer, pumped 1.86 million b/d in May and 1.95 million b/d in April, according to Platts' monthly survey of OPEC production.

Country officials have previously disputed production figures from some secondary sources used by OPEC to track compliance, including Platts, saying that some of the volumes include condensate, which is not covered under the quota.

But much of Nigeria's recent surge comes from the start-up of the deepwater 200,000 b/d Egina field, which came online December 29. And official data from state-owned Nigerian National Petroleum Corp. show that the country's oil and condensate production is averaging around 2.3 million b/d, with officials having previously pegged condensate output at about 400,000 b/d, meaning about 1.9 million b/d of production is crude.

"There are other existing projects that will increase production, as well, over the next six to 24 months,” a Nigerian delegate told Platts on condition of anonymity, conceding that other ministers may not be amenable to a request for a higher quota.

Esan, who is filling in as Nigeria's OPEC representative since President Mohammed Buhari has yet to name a new cabinet, said some of Egina's production could yet be classified as condensate.

"Not all wells are fully functional,” she said. "We are trying to define the composition of this field.”

As for non-OPEC South Sudan, its petroleum and mining ministry reports production of about 180,000 b/d, above its quota of 130,000 b/d.

The country, which has seen its oil sector suffer from years of war, recently appointed Awow Daniel Chuang as its new minister of petroleum and mining, after President Salva Kiir reshuffled his cabinet.

Its oil prospects have brightened following a peace pact signed by Kiir and rebel faction leader Riek Machar in September, with the government aiming to reach 350,000-400,000 b/d by 2020.

Any proposals for higher quotas could receive a cool reception to their requests, with the OPEC/non-OPEC coalition seeking to maintain production discipline.

OPEC and its non-OPEC allies committed in December to 1.2 million b/d in supply cuts through the end of June. Key members of the coalition have endorsed a nine-month extension that will be considered at the meeting.

OPEC ministers are meeting Monday, with non-OPEC ministers set to join talks on Tuesday.

--Staff, newsdesk@spglobal.com

--Edited by Claudia Carpenter, claudia.carpenter@spglobal.com