RPT-UPDATE 2-Nigeria oil export plans delayed amid talks with majors on cuts - sources

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By Noah Browning and Libby George
LONDON/LAGOS, April 27 (Reuters) - Nigeria's state oil
company has delayed publishing its future oil export plans as it
negotiates with local companies and international majors about
how to cut output in line with a global deal on production
curbs, trading sources said.
Official selling prices (OSPs) for Nigerian oil, usually
issued in the second or third week of each month, had still not
been issued on Monday. The global supply deal, agreed by the
OPEC+ group of oil producers, is due to go into effect on May 1.
Traders expect the May OSPs to fall below April's record
lows published by Nigeria National Petroleum Corporation (NNPC).
Traders of Nigerian oil told Reuters that Nigeria, an OPEC
member, had revised its May programmes for oil cargoes and would
also have to lower its output in June, based on the OPEC+ deal.
"May cargoes will get delayed and new June cargoes may be
relatively few," one of the sources said.
The Organization of the Petroleum Exporting Countries,
Russia and other allied producers agreed to cut their combined
output by 9.7 million barrels per day, or each reducing its
production by more than 20%. The first round of cuts will run in
May and June. Reductions will be less severe after that.
"The NNPC is working out the cuts for the international oil
companies. That's why the programme for June and OSP for May is
yet to come out," another trading source said.
The NNPC, which has not issued any public notice of delays
or output cuts, needs to discuss reductions with companies
working in the country, including oil majors Royal Dutch Shell
RDSa.L , BP BP.L , Exxon Mobil XOM.N , Eni ENI.MI and
Chevron CVX.N .
A source at an oil major operating in Nigeria said the
discussions were ongoing, noting that agreement on precise
output allocations for each company remained a hurdle.
"This hasn't been done before", the source added.
Two industry sources said talks ranged from an blanket
percentage output cut for all players to focusing the output
curbs more on offshore fields that are not run by a joint
venture with NNPC.
Brent crude LCOc1 , the benchmark against which Nigerian
oil trades on the global market, fell to its lowest in two
decades last week before staging a modest recovery. Brent was
trading around $20 a barrel on Monday. CRU/WAF
Traders said Nigeria's key crude grade Bonny Light was heard
to be offered at as low as dated Brent minus $5, compared with a
premium of $3 in more normal market conditions.
Surging inventories, as demand for oil has tumbled due to
global measures to fight the coronavirus, have made it a
challenge for some producers to find buyers for their oil.
At least three dozen Nigerian crude cargoes are still
available for export in April and May and the country has
minimal domestic storage.
NNPC head Mele Kyari told Nigerian media last week that
Nigeria had to cut output because of scarce storage capacity.
In addition, major markets, such as Europe and Asia, spurned
West African crude in favour of oil from producers that lie
closer to them, cutting down on shipping times amid the market
uncertainty and reducing freight costs.