African OPEC members confirm production cut, extend window to end of July
Johannesburg — Over the previous weekend, the 11th OPEC and non-OPEC Ministerial Meeting concluded with several resolutions to help maintain a still fragile market stability. The Africa OPEC members reaffirmed their intended 9.7 million bpd production cut and agreed to extend this to the end of July.
Held via video conference on Saturday, 06 June, the Ministerial Meeting reconfirmed the existing arrangements under the April agreement and extended the production cuts by another month until 30 July 30th 2020. The initial agreement would end at the end of June.
In addition, all participating countries subscribed to the concept of compensation by those countries who were unable to reach full conformity to the agreement in May and June. As a result, and in addition to their already agreed production adjustment for May and June, countries who were not able to comply for these two months expressed their willingness to compensate for it in July, August and September.
The reaffirmation of the OPEC+ commitment to the historic deal made last April comes on the back of a steady rise in oil prices. Gradual reopening of world economies along with increased conformity to the production cuts have allowed oil prices to recover gradually and reach the US$40/bbl threshold. The rise has been especially beneficial for Nigeria and Angola.
“OPEC is taking the right steps to respond to the market and should be commended. Uncertainty is bad for the oil industry and the extension of OPEC’s cuts ensures market stability,” said NJ Ayuk, Executive Chairman of the African Energy Chamber.
“African energy companies and even state companies are facing a battle with liquidity because of the price war and the corona virus. They do not have state bailouts like their Western counterparts. We hope the production cuts will give the market a boost, however compliance and collaboration from the G20 is key. OPEC has proven its ability to show leadership in times of crisis. We are all in this together,” he continued.
Earlier this month, the African Energy Chamber called for an extension of the 9.7 million bpd production cut, urging all African oil producers to comply with the agreement. The rebalancing of the market is key for oil producing nations to preserve jobs and give the continent an opportunity to stabilize and recover.
Ayuk acknowledged the role of African OPEC members like Nigeria, Algeria, Equatorial Guinea, Gabon, Congo, Angola, and Libya in honouring the agreement.
Caption: Executive Chairman of the African Energy Chamber, NJ Ayuk.