Algeria requests Opec+ baseline revision

Algeria has requested an upwards revision of the baseline production level from which its Opec+ crude quotas and compliance are calculated.

Speaking on the sidelines of the Adipec conference in Abu Dhabi today, Algerian energy minister Mohamed Arkab said his country's petition will be reviewed during an Opec meeting in March. It is not clear if this will be a gathering of just Opec members or the monthly ministerial meeting of the wider Opec+ coalition. Opec's bylaws require a minimum of two ministerial meetings a year, typically held in June and December, but the group currently meets more regularly with its non-Opec partners to give it greater flexibility to adjust production strategy to Covid-led market volatility.

Arkab said several other countries have asked for a revision of their reference production levels. He did not specify if this includes the five Opec+ members that had requests for higher baselines approved over the summer. Back in July, the UAE objected to an extension of the current output restraint deal beyond April 2022 unless its reference production level was revised higher to factor in capacity growth since the start of the agreement in May last year. The impasse was resolved by the group agreeing to higher baselines for the UAE, Kuwait, Iraq, Saudi Arabia and Russia from May next year, and Opec+ delegates said at the time that Algeria and Nigeria would put forward similar requests for consideration.

Algeria's baseline stands at 1.057mn b/d under the current terms, and Argus estimates that the country's compliance with its production commitments has averaged 107pc since May 2020. The government hopes that a recently implemented hydrocarbon law — developed and passed during Arkab's first tenure as energy minister — will attract investment to Algeria's oil and gas sector as it offers more flexible terms to foreign partners.

Nigeria has yet to submit its request for a baseline revision, according to an Opec+ delegate. Infrastructure problems and incidents of sabotage have weighed on Nigeria's crude production in recent months, with output roughly 240,000 b/d below quota last month, according to Argus estimates. Mele Kyari, managing director of state-owned oil firm NNPC, expects the country to overcome its current production hurdles by the end of the year, having previously forecast a recovery by the end of October or middle of November.

By Ruxandra Iordache, Nader Itayim and Samira Kawar