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Tag: OPEC

  • Oil output reduction: Russia to create monitoring group

    Oil output reduction: Russia to create monitoring group

    Russia will create a monitoring group to ensure oil output reduction following the newly-clinched output cut pact between Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers, Russian Energy Minister, Alexander Novak, said Sunday.

    “We will create a monitoring group inside the country at a meeting with our oil companies. The most important thing is to maintain a certain decrease in oil production output in the country in general,” Novak, who was in Vienna for the long-awaited negotiation, was quoted by the RIA Novosti news agency as saying.

    Novak added that he will meet with operators of oil companies next week to discuss details of the oil output reduction.

    On Saturday, 11 non-OPEC oil producers, including Russia, agreed to reduce oil output by around 558,000 barrels per day in the wake of November’s OPEC agreement to slash production by 1.2 million barrels per day, which represents the strongest effort made in the last 15 years by these oil-rich countries to re-energize the global oil market.

    Based on the agreements, Russia would cut its oil output by 200,000-300,000 barrels per day in early 2017, and gradually to 10.947 million barrels a day.

    Azerbaijan’s Energy Minister, Natig Aliyev, said on Saturday that Russia and Kuwait would head a committee monitoring implementation of the oil output cut agreements.

    Novak expected that the rebalancing of the oil market could begin in the third quarter of 2017, on condition that the OPEC members and non-members of the organization implement the agreements.

  • Oil-Producing Countries agree to cut output with OPEC

    Oil-Producing Countries agree to cut output with OPEC

    Oil-producing nations on Saturday struck a deal to cut output along with the Organization of the Petroleum Exporting Countries OPEC, a pact designed to reduce a global oversupply of crude, lift prices and lend support to economies hurt by a two-year market slump.

    The deal will remove about 600,000 barrels a day of crude oil from the market. That would come on top of 1.2 million barrels a day in cuts already agreed to by OPEC, amounting to a total of almost 2% of global oil supply.

    The deal, if complied with, would represent an unprecedented level of cooperation among oil-producing countries.

    Big questions remain going forward. OPEC members themselves have a spotty record of complying with their own agreements, and there is no legally binding way to deter producers inside or outside the cartel from cheating on their pledges.

    For now, it also remains unknown how much of the cuts promised Saturday would have happened anyway through natural declines that were expected. Oil-market analysts said prices wouldn’t go up if many of the cuts were from countries where production is expected to fall anyway.

    But the deal represented a diplomatic breakthrough for OPEC as it grapples with a world where other oil producers have as much or more power over the market as the 13-nation cartel.

    It is the first time since the 1970s that a coalition of countries whose oil production amounts to over half of global supply has come together to influence crude prices. OPEC’s own market share hasn’t been that large since the 1970s and previous deals with non-OPEC producers have been less comprehensive.

    The deal involved 12 countries outside of OPEC. The bulk of the cuts—300,000 barrels a day—are pledged by Russia, which produces more crude oil than any other country. Other output reductions are promised by Oman, Azerbaijan and Sudan, among others.

    Oil-industry analysts have said the production cuts could speed up a long-awaited rebalancing of global oil supply with consumer demand, which have been out of whack for over two years.

    An American oil boom over the past eight years flooded the market. OPEC, especially its biggest member, Saudi Arabia, initially ratcheted up its own output to defend its market share, abandoning its traditional role of regulating supply to keep prices high.

    But prices fell farther and for longer than the industry expected, falling below $28 a barrel this year from highs of over $100 a barrel in 2014. OPEC members such as Venezuela and Nigeria have experienced economic disasters, while Saudi Arabia began burning through its cash reserves to plug a gap caused by falling oil revenue.

    OPEC decided on Nov. 30 to return to its old form and cut production back to boost prices, but members like Saudi Arabia insisted that Russia and other countries outside the cartel pitch in as well. Saturday’s (today) agreement formalizes commitments non-OPEC producers made to OPEC.

  • OPEC excludes Nigeria from production cut as oil prices set to appreciate

    OPEC excludes Nigeria from production cut as oil prices set to appreciate

    Following its 171st meeting held at Organization of the Petroleum Exporting Countries (OPEC) headquarters in Vienna on Wednesday 30th November, 2016, OPEC, has reached a landmark deal that will effectively cut production by about 1.2 million barrels per day, or about 4.5 percent of current production, to 32.5 million barrels per day.

    A statement issued by Idang Alibi, Director, Press Ministry of Petroleum Resources, said the agreement follows an earlier meeting held in September in Algeria where each member country reached a consensus on the need to cut production.

    The statement said: “it will be the first time since 2008, that OPEC would be accomplishing such a feat which is expected to tackle the key challenge of low price of oil in the international market which has affected the global economy with most OPEC member countries including Nigeria feeling the impact.”

    Member countries at the meeting agreed on the deal where considerations of the cartel offered to Iran, Libya and Nigeria would mean that in 2017, total production might likely increase, even as other members seek to cut output in the first quarter of next year.

    In the agreement where the countries are exempted from the production, Nigeria was accommodated due to some of the Oil and Gas facilities damaged by militant attacks in recent months.

    Dr. Emmanuel Ibe Kachikwu, Minister of State for Petroleum Resources, led Nigeria’s delegation at the meeting and the negotiation which saw Nigeria get an exemption from the production cut. The concession was given as the country has been through production challenges recently due to the vandalism of oil and gas infrastructure which has negatively affected the country’s ability to produce oil optimally in the recent past.

    This deal will obviously enhance the prospects for the Oil and Gas industry with the impacts already being felt as oil prices surged more than 8% Wednesday afternoon in London, hitting a high of $51.84 a barrel.

    A stable increase in oil prices which is one of the rewards that the deal will produce would most likely contribute positively to the stimulation of the economies of member countries including Nigeria who are presently undergoing challenges.

    The details of the deal saw Saudi Arabia agree to take on the highest burden of cuts—a 486,000 barrel a day to its output, while persuading Iraq to reach a decision to reduce its output, as well as getting non-OPEC producer Russia on board for a 300,000 barrel-a-day cut, according to OPEC.

    This landmark deal is coming at a time when Dr. Ibe Kachikwu, the Honourable Minister of State for Petroleum Resources is working assiduously with Ministers from other OPEC member countries and Nigeria’s Dr. Mohammed Sanusi Barkindo as the Secretary General of the Organization, to steer the organization to achieve and sustain unity and competitiveness in the global energy market.