The Federal Government has backed the idea of compensating for its excessive output in May and June, agreeing to make additional oil production cuts from July to September.

Nigeria produced 120,000 barrels per day, beyond its quota the Minister of State for Petroleum Resources, Timipre Sylva, said in a statement, Saturday that the federal government is ready to make additional oil output cuts from July to September.

The Organization of the Petroleum Exporting Countries (OPEC) members, led by Saudi Arabia and other key oil producers agreed on Saturday to extend historic output cuts through July, as oil prices tentatively recover and coronavirus lockdowns ease.

In a statement by OPEC, the 13-member cartel and its allies, notably Russia, decided to extend by a month further till July 31, it’s agreed 9.7 million barrels per day (bpd) cut in May and June.

“In light of these facts, and in view of current fundamentals, all member countries agreed to the five key elements in reaching their unanimous decision, which will be recommended to non-OPEC participating countries”.

• “reconfirmed the existing arrangements under the April agreement.

• “Subscribed to the concept of compensation by those countries who were unable to reach full conformity (100 per cent) in May and June, with a willingness to accommodate it in July, August and September, in addition to their already agreed production adjustment for such months.
• “Agreed to the option of extending the first phase of the production adjustments pertaining in May and June by one further month.
• “Recognized that the continuity of the current agreement is contingent on them fulfilling elements 1 and 2 above.
• “Agreed without dissent that the full and timely implementation of the agreement remains inviolable, based on the five key elements.
• “The meeting, therefore, agreed unanimously to extend the first phase of the production adjustment agreed at the 10th (Extraordinary) OPEC and non-OPEC Ministerial Meeting for a further month, to now run from 1 May 2020 to 31 July 2020.

Countries like Nigeria and Iraq, who are regarded as the main culprits, did not comply with agreed output cuts, but the governments have agreed to deeper production cuts to meet up with the agreed quota.

Meanwhile, Iraq’s Ministry of Oil spokesperson, Assem Jihad, said in a statement, agreed to extra cuts but did not reveal how the government would reach agreement with oil majors on curbing output.

OPEC said all meeting participants agreed Saturday that countries that fell short of their production cut quotas so far were willing to make up for it in July, August and September.

Despite the difficulties, the output cuts have helped support oil prices, which rose to around $40 per barrel at the start of June for both the US benchmark, West Texas Intermediate (WTI), and Europe’s Brent North Sea contracts.

Around April 20, both had slumped to historic lows, with Brent falling as low as $15 and WTI briefly entering negative territory.

Saturday’s meeting had been originally scheduled for next week but was brought forward at the suggestion of Algeria’s Arkab.

Iraq, with one of the worst compliance rates in May, agreed to extra cuts although it was not clear how Baghdad would reach agreement with oil majors on curbing Iraqi output.

Iraq produced 520,000 bpd above its quota in May, while overproduction by Nigeria was 120,000 bpd, Angola’s was 130,000 bpd, Kazakhstan’s was 180,000 bpd and Russia’s was 100,000 bpd, OPEC+ data showed.

OPEC+’s joint ministerial monitoring committee, known as the JMMC, will meet monthly until December to review the market, compliance and recommend levels of cuts. JMMC’s next meeting is scheduled for June 18.

OPEC and OPEC+ will hold their next scheduled meetings on Nov. 30-Dec. 1