Nigeria will refocus on oil projects that deliver higher returns to keep production within the limits set by OPEC, oil minister Emmanuel Kachikwu said late Tuesday.
The country has been struggling to make good on its pledge not to produce above 1.8 million b/d under the OPEC/non-OPEC output agreement, with output hitting its highest level in more than two years in January at 1.93 million b/d, according to the S&P Global Platts survey.
“Oil prices are currently depressed at $60-$70/b and, coupled with the production quota imposed by the Organization of Petroleum Exporting Countries, Nigeria will begin to look at its priorities differently,” Kachikwu said in an oil ministry statement.
Africa’s biggest oil producer “will only consider projects that are of higher net value for the country,” he added.
Nigeria is working hard to keep its crude oil output within the OPEC quota, and would therefore need to focus on getting more revenue from existing projects by reviewing the production sharing contract (PSC) terms, he said.
Kachikwu made clear this means prioritizing the approval of oil projects with international oil companies and reviewing the fiscal terms in the agreements with foreign partners to develop deepwater oil fields.
Nigeria has not seen the start-up of new big oil fields in almost half a decade. But later this year it will get first oil from the 200,000 b/d offshore Egina oil field.
While many OPEC members have pointed to the rise in oil prices as a sign of the benefits of the production cut deal in which OPEC and its allies cut production by 1.8 million b/d from January 2017, it seems Nigeria is still feeling the squeeze.
It had been exempted from the cuts as it dealt with civil unrest from groups in the Niger Delta oil producing region that have sabotaged pipelines and other infrastructure to protest what they see as inequitable sharing of oil revenues.
But at the latest OPEC/non-OPEC meeting Nigeria and Libya were brought into the fold with a combined 2.8 million b/d quota.