Nigeria to stick to OPEC quota as oil capacity builds: NNPC

September 9 - Nigeria will continue to abide by its current OPEC quota despite a steep recent rise in oil production as more militants in the restive Niger Delta take up the government's offer of an amnesty if they agree to surrender arms, a senior Nigerian oil official said September 9.

"We are very confident that the amnesty framework will work. A couple of months ago, we could hardly produce our OPEC quota. You can see within a very short period of time, we have reversed that," state-owned NNPC's group managing director, Mohammed Barkindo, told Platts in an interview.

Barkindo, attending the OPEC meeting in Vienna, said Nigeria's production capacity had risen to 3.6 million b/d in recent weeks from a previous level of 3.2 million b/d, while actual crude production has been steadily inching up to over 1.7 million b/d.

"We want to make sure that the capacity that we have built which is now 3.6 million b/d is sustained. This capacity has been built up at very high costs and is also being maintained at high costs," Barkindo said.

"We want to continue to abide by OPEC quota limitations but we want to be in a position where if there is a call on spare capacity we will be able to supply the market," he said.

"Spare capacity is an insurance against such shock levels as last year. It is in the interest of all producers to maintain some healthy spare capacity," he said.

Commenting on oil prices, Barkindo indicated that $70-$75/barrel was a fair price for producers and consumers.

"$70-$75/barrel seems to be at the moment the marginal cost of production. Taking into account the cost of alternatives, it may be the band to work on for now," he said.

Barkindo also said major gas project like the Brass and OKLNG projects would move ahead despite the government's gas policy ,which has shifted the focus to meeting domestic demand rather than exports.

Industry sources said last week that partners in Brass LNG were expected to make a final investment decision on the project, while little progress has been made on the Olokola (OKLNG), delayed by security issues in the Niger Delta.

"We are trying to maintain a balance between the export and domestic projects. Our priority for obvious reasons at the moment is domestic gas. But that is not to say we are stopping or let alone shelving these projects," he said.

The $10 billion OKLNG project is being built on a site that straddles the Ondo and Ogun states in Niger Delta by Chevron, Shell, and BG in a joint venture with NNPC, but has been hindered by soaring costs for the phased construction of the four LNG trains.