Continental Focus, International Reach

OPEC and Allies Begin Production Cuts

Monday, January 21, 2019

Last month an OPEC-led bloc agreed to slash a combined 1.2 million bpd of production in order to boltser crude oil prices that have started to slump in recent months.

Algeria’s state-controlled news agency APS reported that under its new OPEC quota, the country will have to drop its output by 24,000-25,000 bpd. According to Salah Mekmouche, Sonatrach’s upstream executive, the 24,000-25,0]00 bpd cut back took effect January 1.

Mekmouche said that before the agreement reached by OPEC members and its allies led by Russia was reached last month, Algeria was producing 1.08 million bpd.

Angola and Nigeria will absorb heavy production cuts as well, at 32,000 bpd and 50,000 bpd respectively. The remaining two Big Five African producers, Egypt and Libya, will not be making cuts as Egypt is not an OPEC member and Libya is exempt.

Meanwhile, other members and non-members from Africa – including Congo, Equatorial Guinea, Gabon, South Sudan and Sudan – will also cut back some of their production to assist in this effort to stabilize pricing by leveling the supply and demand equation.

Saudi Arabia will take the biggest hit, taking over 300,000 bpd off the market, and non-OPEC member Russia is expected to pare down 230,000 bpd.