The world welcomed a new deal that will see oil production cut to as much as 9.7 million barrels per day by OPEC and its alliance countries OPEC+. OPEC, Russia, Brazil, Mexico and the rest of the G20 countries have had series of virtual meetings since Thursday as they negotiated to a hammer out a deal.
The deal is historic because, for the first time, OPEC and its alliances are not the only ones cutting. They also got the G20 countries to cut ensuring that everyone plays a part in stabilizing crude oil prices. So what was agreed? Here is the break down of the cuts and the timelines;
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What is OPEC+ Cutting:
- Firstly, the will reduce their overall crude oil production by 9.7 mb/d, starting on 1 May 2020, for an initial period of two months that concludes on 30 June 2020.
- Subsequently, and for another 6 months between 1 July 2020 to 31 December 2020, they will maintain a crude oil production cut of 7.7 mb/d.
- Starting January 2021 they will maintain cuts of 5.8 mb/d for 16 months ending 30 April 2022.
- The agreement will be valid until 30 April 2022, however, the extension of this agreement will be reviewed during December 2021.
What the US, Brazil, Canada, and G20 are cutting
- The United States, Brazil, and Canada are expected to cut about 3.7mb/d
- The rest of the G20 countries will be cutting about 1.3mb/d.
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What about Nigeria?
- Nigeria will be producing 1.412 mb/d till December June 30, 2020.
- We will then increase production to 1.495 mb/d between July 1 and December 2020
- And then increase production to 1.579 mb/d starting January 2021 and ending April 2022.respectively for the corresponding periods in the agreement.
- This is in addition to condensate production of between 360-460 KBOPD of which are exempt.