Wednesday, Dec 07, 2016
Abu Dhabi: UAE energy minister Suhail Al Mazroui expressed optimism that non-Opec countries will cooperate in cutting oil production to stabilise prices as part of the deal which the group reached with non-Opec members in Vienna last week.
“We are optimistic about the commitment from non-Opec [countries]. I think it’s reasonable what we set for them. It’s half of what Opec committed to cut,” Al Mazroui told reporters on the sidelines of Bloomberg Markets Most Influential summit in Abu Dhabi on Wednesday.
Opec will hold talks with countries outside the group on December 10 in order to chalk out the details relating to the implementation of the historic deal reached last week in Vienna.
Opec members will be cutting production by 1.2 million barrels per day starting from January 1 next year, whereas non-Opec members will slash their daily output by 600,000 barrels, with Russia accounting for half of that.
The UAE energy minister said fourteen countries have been invited to the meeting including Russia, Mexico and Kazakhstan.
“I can’t say who will bring the biggest cut [among non-Opec countries] but it depends on every country. If we reach [a] balance, everyone will benefit. We expect market recovery in the first half of 2016.”
“Everyone understands the decision of Opec. It’s a group decision. I have trust in the organisation and the members of the organisation.”
“I also have a trust in Russia as a responsible producer. They did not miss any meetings or invitations during negotiations. I am confident that Russia will respect the decision.”
This is the first time since the financial crisis in 2008 that Opec countries came together to slash output to stabilise oil prices.
Prices have since rallied since the November 30 decision. Brent, the global benchmark, was trading at $54.12 (Dh198.78) per barrel on Wednesday at around 3pm UAE time, up by about 0.35 per cent.
Terming the Vienna meeting as historic, the UAE energy minister said it came at the right time as low oil prices were affecting investment levels in the industry.
“There is a great decline in the level of investment in the upstream oil and gas sector, which worried us a lot. People [have made accusations] that the organisation [Opec] is just after the price. If no one is investing in oil, two years from now, oil prices will go up to $100 per barrel. We want to avoid sharp increases and declines in oil prices.”
He said the global oil market needs price levels which provide incentives to invest in production, adding that even at a price of $50 a barrel, investment was declining,
“We have tested $40 and $50 prices, and it hasn’t worked. We need a price that incentivises the investment to come back,” he said without giving a specific figure on the right price that would benefit the industry.
Speaking at the same summit, Nigeria oil minister Emmanuel Ibe Kachikwu said it would be difficult for them to go it alone if non-Opec countries did not participate in the deal.
“We did clearly say that we would like non-Opec [countries] to participate. Certainly our energy to carry [the burden] alone without their participation would be limited,” he told reporters, adding that the deal would go ahead even if it was only Russia that committed to the deal.
By Fareed Rahman Senior Reporter
Gulf News 2016. All rights reserved.
