Nigeria Wiggles Under OPEC Restraints

Nigeria would like to move the limitations on its OPEC quota in order to continue developing its deepwater projects.

Africa's largest oil producer is bursting out of its current OPEC quota and has more production capacity on the way as foreign oil companies are installing additional facilities in the Gulf of Guinea.

Part of the country's problem is that it wants to maintain investment in the deepwater projects by international oil companies without having to reduce the onshore oil field output.

"Our OPEC production quota is a major issue because of the injection of costly deepwater oil into the quota," said Edmund Ayoola, general executive director of the state oil company Nigerian National Petroleum Corp.

"Deepwater production is more expensive than our conventional production so it should be treated differently. Deepwater production should be exempt from the OPEC quota."

Analysts think it unlikely that Nigeria will be able to change the quota rules and will have to find a way to limit output under the latest cartel guidelines.

Any change in quota rules could change how the deepwater reserves are allocated. As OPEC quotas are bolstered by the country's total oil reserves, any reduction in this could weaken Nigeria's case for its existing quota.

OPEC has yet to issue a statement concerning Nigeria's request.