Soft caps threaten Nigerian budget
ABUJA, December 1, 2017 – “Soft” output targets reportedly imposed on Nigeria and Libya as part of the OPEC deal to extend global production cuts through the end of 2018 could hurt Nigeria’s economy, local media reported on Friday.
The previous day, international media were abuzz with reports, some of them later retracted, about Libya and Nigeria being formally part of the deal.
“Both countries’ exemptions will continue for one year,” Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu said in an interview with the Financial Times. “This comes with some level of discipline. This doesn’t mean a carte blanche for Libya and Nigeria. This is where we are and what we are still discussing.”
The report added that soft caps of 1.8 million bopd and 1 million bopd were being discussed for Nigeria and Libya, respectively.
This, however, would mean that cash-strapped Nigeria would not be able to pump more oil in order to plug holes in its budget.
“This has a telling impact on our plans to implement a robust budget in 2018,” Franklin Ngwu, an economist at the Lagos Business School, told local daily The Guardian.