THE Nigeria National Petroleum Corporation has announced a 5 per cent reduction in crude oil exports citing production cut instructions by the Organisation of Petroleum Exporting Countries (OPEC).

The Group General Manager, Public Affairs Department of NNPC, Dr. Levi Ajuonuma in a statement explained that cargoes in November and December lifting programmes are hereby reduced accordingly.

He pointed out that in addition, five (5) cargoes from the November lifting programme and 7.6 cargoes from the December lifting programme have been cancelled.

Details of cargoes cancelled in both months will be advised to customers and operators in the affected terminals.

Although Nigeria had a daily quota of about 2.38 million barrels per day, it has not been able to meet this obligation owing to the situation in the Niger Delta were over one million barrels per day remains shut-in as a result of the activities of militants operating in the area.

Indications are that with a 5 per cent output cut, Nigeria is expected to shed about 119,000 barrels per day, leaving the country's output at 2.261,000 barrels per day. The cut is expected to take effect from November 1, 2008.

However, investigations show that in September, Nigeria was barely able to produce 1.999 million barrels per day and further checks revealed that the October figures may not be any different from that posted last month.

An industry operator who spoke on the basis of anonymity said Nigeria has not been able to meet its OPEC quota for the later part of last year and all of this year, adding that any talk about cutting down on output amounts to window dressing for the benefit of the uninformed.

Meanwhile, declining US oil consumption continued to reduce OECD oil demand by more than 1.8% in 2008. Factors affecting world oil demand such as the slowing economy, high retail prices and hurricanes led to a decline of more than 1.0 mb/d in total OECD consumption.

Non-OECD oil demand growth increased 1.2 mb/d in September. Most of this is attributed to Asian and Middle Eastern oil demand. Total world oil demand growth for 2008 has been reduced to half of the initial forecast to stand now at 0.6 mb/d.

In 2009, reduced economic growth outlook is expected to continue impacting oil demand. Hence, oil demand in the USA will be lower than initially expected, at least in the first half of the year. The likely spillover to other economies will affect oil demand elsewhere to some degree.

As a result, world oil demand growth for next year has been revised down by 0.1 mb/d to show a growth of 0.8 mb/d. OECD oil demand is expected to shrink by 0.4 mb/d next year; however, non-OECD countries' oil demand growth is estimated to reach 1.1 mb/d with most of the growth coming from China, the Middle East, and India.

Non-OPEC supply growth in 2008 has been revised down to stand at 0.3 mb/d over the previous year.

The adjustments were made to accommodate the impact of hurricanes on US production, reduced oil output from Azerbaijan following a gas leak, and other factors.