OPEC ministers on Thursday agreed to a nine-month extension of their production cut agreement through the end of 2018, and will call on Libya and Nigeria not to exceed a combined output of 2.8 million b/d, Iranian oil minister Bijan Zanganeh told reporters.
"We decided to roll over the past decision to the end of 2018, and Nigeria and Libya accepted not to produce more than their production in 2017 for all of 2018," Zanganeh said. "We didn't set a figure [for Libya and Nigeria], but both are less than 2.8 [million b/d]."
Russian energy minister Alexander Novak, who has remained noncommittal on the nine-month extension, has yet to sign off on the deal and is currently meeting with OPEC ministers.
The current deal calls on OPEC and its 10 non-OPEC partners, led by Russia, to cut 1.8 million b/d in supplies from October 2016 levels to hasten the market's rebalancing. It is scheduled to expire in March.
OPEC granted Libya and Nigeria their exemptions when the production cut agreement with 10 non-OPEC countries was negotiated late last year, as the two African nations dealt with internal strife and civil unrest that had targeted their oil infrastructure.
But both countries have seen sharp rises in production this year, partially undoing the impact of the OPEC/non-OPEC coalition's collective 1.8 million b/d in supply reductions.
Libyan output rebounded to 980,000 b/d in October, a rise of 70,000 b/d from the previous month as production from key fields like Sharara ramped up.
The normally talkative Mustafa Sanalla, the chairman of Libya's state-owned National Oil Corporation, attended the Vienna meeting, but refused to speak with journalists. He has outlined ambitious plans to raise Libyan production from current levels of around 1 million b/d to 1.25 million b/d by the end of 2017.
CONCERN RISES OVER LIBYA'S OIL CRESCENT
"Technical and security realities on the ground will likely limit their upside, in effect accomplishing the same outcome," said Mohammad Darwazah, an analyst with Medley Global Advisors.
Concerns are rising in Libya's key eastern "Oil Crescent" where one of the country's most powerful militias has imposed a military no-go zone, just as OPEC slapped it with a production cap for the whole of next year.
Under a command from General Khalifa Haftar, the Libyan National Army has declared the entire Oil Crescent region a closed military zone, and warned earlier this week that access would not be permitted to anyone without authorization from their headquarters.
The decision is part of the LNA's strategy to counter threats around the facilities in central Libya from forces affiliated with the Islamic State militant group.
It has raised fears of renewed violence around the country's key oil infrastructure. The Oil Crescent includes Es Sider, the country's largest port, as well as the Ras Lanuf, Marsa Brega and Zueitina ports. So far there have been no disruptions and operations at oil fields currently feeding those terminals, sources in Libya told S&P Global Platts Thursday.
Es Sider and Ras Lanuf, were badly damaged by previous IS attacks, which reduced their capacity significantly.
NIGERIA TO RAMP UP CONDENSATE OUTPUT
Nigerian oil minister Emmanuel Kachikwu told reporters before the meeting that his country's current crude oil production was 1.70 million to 1.75 million b/d and would not hit 1.8 million b/d until January at the earliest.
He said Nigeria would support an output cap for itself at 1.8 million b/d and would continue to be responsible with its production, as it has since the deal first came into effect from January this year.
"Nigeria will always support any moves to help solidify OPEC, especially given the gains we are having," Kachikwu said. "Nigeria is already
contributing to it."
At the same time, however, it will seek to boost its condensate production next year, instead of crude, Kachikwu said, describing the strategy as part of its commitment "to be disciplined" with OPEC's efforts to rebalance the market.
"A lot more energy will now go to build to condensates as opposed to building crude expansion production," Kachikwu told reporters just before OPEC ministers met. "We have to understand that the gift of exemption carries a responsibility to be disciplined."
The country is currently producing a total of 2.05 million-2.10 million b/d, with crude oil accounting for 1.70 million-1.75 million b/d and condensates production at "around 350,000 b/d."
It has an oil production capacity of 2.2 million-2.3 million b/d. Condensates are not subject to the OPEC deal.
