Angola and Nigeria set to open giant fields. At what cost to OPEC deal?
Angola may exceed its cap with Kaombo's start. Nigeria will need to rein in output to comply.
- Accord commitment December volumes
Total to bring projects off Angola and Nigeria online in 2018. Field startups will add 430,000 barrels a day between them
Petroleumworld 02 08 2018
Two OPEC countries will bring giant oil fields online this year, testing their commitment to cap output amid a global push to curb supply.
Total SA plans to start production at two so-called mega-projects, Kaombo in Angola and Egina in Nigeria, Chief Executive Officer Patrick Pouyanne said Thursday. Once both are onstream -- Kaombo by mid-year and Egina in the fourth quarter -- they'll have a combined capacity of 430,000 barrels a day. That exceeds the total output of OPEC members Gabon and Equatorial Guinea.
The Organization of Petroleum Exporting Countries has been curtailing production for more than a year, achieving unprecedented compliance with caps and driving oil prices up 18 percent in 2017 as global stockpiles finally shrank. Yet the latest supply data from Angola and Nigeria show that the additional barrels planned for this year would cause both to flout their OPEC commitments should their output remain otherwise unchanged.
Total didn't immediately reply when asked whether it expects to curb future output should host governments request it.
Angola's production totaled 1.63 million barrels a day in December, according to OPEC, within its quota of 1.67 million a day. Nigeria, whose 1.8 million-barrel cap has only recently come into force, pumped 1.86 million a day in the month. OPEC has said it's committed to keeping limits on output through 2018, though a ministerial meeting is scheduled for June to discuss policy.
To be sure, neither African country is guaranteed to maintain steady production from existing deposits. Angolan fields have suffered from natural declines, while Nigeria has been subject to militant attacks that sent output to a two-decade low in 2016.
Whether or not they exceed their caps, OPEC can count on tumbling output in Venezuela to keep the organization in compliance with its overall quota. RBC Capital Markets warned this week that Venezuelan production -- crippled by years of under-investment and an economic downturn -- could slump by as much as a million barrels a day this year.