Kuwait, Oman urge pro­duc­ers to co­op­er­ate over out­put cuts

OPEC chief hails Amir’s role • Kuwait to raise non-as­so­ci­ated gas pro­duc­tion

Kuwait Times - - Front Page -

KUWAIT: Kuwaiti and Omani oil min­is­ters yes­ter­day called on OPEC and nonOPEC pro­duc­ers to con­tinue their un­prece­dented co­op­er­a­tion to main­tain sta­bil­ity in the en­ergy mar­ket. Pro­duc­ers from the OPEC oil car­tel and non-OPEC coun­tries struck a deal in 2016 to trim pro­duc­tion by 1.8 mil­lion bar­rels per day to re­bal­ance the mar­ket af­ter its col­lapse in 2014. The deal, which runs out at the end of this year, has suc­ceeded in boost­ing oil prices above $70 a bar­rel from be­low $30 a bar­rel in early 2016.

Kuwait’s Oil Min­is­ter Bakheet AlRasheedi said he be­lieves that oil pro­duc­ers were on the right path to re­store sta­bil­ity to the oil mar­ket. “A year ago, there was a sur­plus of 340 mil­lion bar­rels of oil. At the end of Fe­bru­ary, the sur­plus dropped to 50 mil­lion bar­rels and we be­lieve we are on the right path to get rid of this sur­plus,” Rasheedi told re­porters at the fifth Kuwait Oil and Gas Con­fer­ence. He said that the OPEC and non-OPEC co­op­er­a­tion will be re­viewed at an OPEC meet­ing in June. “Mar­ket con­di­tions will de­ter­mine whether the deal will be ex­tended be­yond 2018 or ar­rive at a per­ma­nent agree­ment... to sup­port the mar­ket on a long-term ba­sis,” he said.

Omani Oil Min­is­ter Mo­hamed AlRumhi said a de­crease in in­vest­ment in oil pro­duc­tion op­er­a­tions poses a ma­jor chal­lenge for the in­dus­try. How­ever, pro­duc­ers’ com­mit­ment to the oil out­put cut agree­ment helped bring back in­vest­ments to their pre­vi­ous lev­els, es­pe­cially with the re­cent re­cov­ery of oil prices, he noted. “I call for the sig­na­to­ries of the (co­op­er­a­tion) dec­la­ra­tion agree­ment, those 24 na­tions from OPEC and nonOPEC, to con­tinue the di­a­logue, the un­der­stand­ing and com­mit­ment in main­tain­ing the mar­ket con­di­tions that will en­cour­age in­vest­ment,” Rumhi told the con­fer­ence.

He also called for en­hanc­ing “col­lab­o­ra­tion and work to­gether to en­sure se­cu­rity of sup­ply for con­sumers and se­cu­rity of de­mand for pro­duc­ers”. “Oil mar­kets have faced lesser chal­lenges in the past dur­ing spo­radic pe­ri­ods. How­ever, these chal­lenges have be­come big­ger and more dif­fi­cult now, es­pe­cially with the rapid po­lit­i­cal and eco­nomic changes tak­ing place in the world,” he warned.

OPEC king­pin Saudi Ara­bia, the United Arab Emi­rates and sev­eral other coun­tries have called for strik­ing a long-term co­op­er­a­tion deal to sta­bi­lize the oil mar­ket. The joint min­is­te­rial com­mit­tee of OPEC and non-OPEC min­is­ters, which mon­i­tors com­pli­ance to pro­duc­tion cuts, meets in Jed­dah, Saudi Ara­bia on Fri­day to re­view ad­her­ence and dis­cuss long-term co­op­er­a­tion.

OPEC sec­re­tary gen­eral Mo­ham­mad Sanusi Barkindo told the Kuwait con­fer­ence that the 2016 deal achieved a great suc­cess in over­com­ing the “worst cy­cle in the his­tory of oil”. A “new chap­ter is be­ing au­thored” by OPEC and non-OPEC pro­duc­ers to con­tinue co­op­er­a­tion, he said. “In the months ahead, we will look to in­sti­tu­tion­al­ize this long-term frame­work for con­ti­nu­ity with an in­clu­sive and broad-based par­tic­i­pa­tion,” Barkindo said.

Barkindo praised HH the Amir’s ef­forts for restor­ing sta­bil­ity to the oil mar­kets and con­tribut­ing to the pro­duc­ers’ ac­cord on slash­ing out­put. Barkindo re­vealed that he had re­quested a meet­ing with the Amir dur­ing the oil mar­ket cri­sis in 2016 and ex­plained to him what was hap­pen­ing on the in­ter­na­tional mar­kets, so­lic­it­ing his help to re­store sta­bil­ity.

“I had asked His High­ness to help in restor­ing con­fi­dence in OPEC and he promised me that Kuwait would play a me­di­a­tion role among the (con­cerned) states and that he would talk with his friends - the kings and pres­i­dents - to re­solve the cri­sis. The next time I re­turned to Kuwait His High­ness had al­ready hon­ored his prom­ise and asked me whether I was pleased and I replied that all were happy for His High­ness’ ef­forts that re­sulted in ink­ing the ac­cord on cut­ting out­put by OPEC and nonOPEC states,” he said.

Barkindo said Kuwait is among the states that have launched mega projects in the oil sec­tor and will re­main a trusted source for en­ergy that can be de­pended on in the oil mar­ket. The world needs more en­ergy, he af­firmed, fore­cast­ing a rise in de­mand for oil and gas by 6-7 per­cent by 2040. Crude oil de­mand rose to 1.6 mil­lion bar­rels per day this year, he dis­closed.

Mean­while, Kuwait plans to raise pro­duc­tion of non-as­so­ci­ated gas to nearly 500 mil­lion stan­dard cu­bic feet per day by end of 2018, Rasheedi an­nounced yes­ter­day. Kuwait’s con­sump­tion of nat­u­ral gas is about 60 per­cent for the re­fin­ing and petro­chem­i­cal sec­tor, while the re­main­ing 40 per­cent is for power gen­er­a­tion, said the min­is­ter in his key­note speech at the con­fer­ence.

Kuwait Petroleum Cor­po­ra­tion has re­al­ized the grow­ing role of the pri­vate sec­tor and moved early to out­source many ser­vices lo­cally, thus con­tribut­ing to the growth and com­pet­i­tive­ness of the pri­vate sec­tor. The ex­e­cu­tion of the long-term strat­egy will en­able the oil sec­tor to move for­ward and adapt to the fu­ture suc­cess­fully, he said.

“Hence, we can meet our share within the grow­ing en­ergy de­mand world­wide as a re­li­able pro­ducer and sup­plier of oil to the world, as well as main­tain eco­nomic sus­tain­abil­ity and pros­per­ity of Kuwait and en­hanc­ing and strength­en­ing KPC’s fu­ture role and the Kuwaiti econ­omy,” said Rasheedi, who is also Min­is­ter of Elec­tric­ity and Wa­ter. “We be­lieve that the fu­ture ex­pan­sion of en­ergy de­mand re­quires timely in­vest­ments in all forms of en­ergy.

We urge the de­vel­op­ment of clean fos­sil fu­els and for the pro­mo­tion of as­so­ci­ated tech­nolo­gies in­clud­ing the ef­fec­tive usage of car­bon cap­ture and stor­age,” he added.

KPC CEO Nizar Al-Ad­sani said KPC’s 2040 strate­gic di­rec­tion has set an am­bi­tious roadmap for the Kuwaiti oil sec­tor to ex­e­cute mega projects in­side and out­side Kuwait on var­i­ous as­pects, with the ul­ti­mate goal to max­i­mize rev­enue gen­er­a­tion for the Kuwaiti econ­omy.

“We plan to in­vest KD 34 bil­lion over the next five years on these projects. In­side Kuwait, the oil and gas growth strat­egy is bridg­ing the de­mand gap as well as mak­ing en­ergy more ac­ces­si­ble to con­sumers in emer­gent economies and the de­vel­op­ing world. This strat­egy in­cludes achiev­ing four mil­lion bar­rels per day of crude oil pro­duc­tion by 2020 and cre­at­ing the mech­a­nisms to main­tain such pro­duc­tion lev­els,” Ad­sani said.

“Fur­ther­more, we will be max­i­miz­ing ex­plo­ration ac­tiv­i­ties as well as the de­vel­op­ment and pro­duc­tion of non-as­so­ci­ated nat­u­ral gas in Kuwait with a tar­get to achieve 2.5 bil­lion stan­dard cu­bic feet per day by 2040. KPC is ex­pand­ing its re­fin­ing ca­pac­i­ties and ca­pa­bil­i­ties both do­mes­ti­cally and in­ter­na­tion­ally,” he said.

“We in KPC be­lieve that petro­chem­i­cals are an im­por­tant arm to max­i­mize KPC’s value chain re­turns and we are fo­cus­ing on ex­pand­ing our com­mod­ity chem­i­cal port­fo­lio. KPC will seek ben­e­fit from the ex­pe­ri­ence and the tech­no­log­i­cal ad­van­tages of joint ven­ture part­ners to reach fur­ther down the hy­dro­car­bon chain and en­sure di­ver­si­fi­ca­tion to­wards spe­cialty and de­riv­a­tive petro­chem­i­cals,” Ad­sani said. “KPC pro­vides ad­di­tional job op­por­tu­ni­ties for over 13,000 to join us dur­ing the 2040 strate­gic di­rec­tions im­ple­men­ta­tion, in ad­di­tion to 100,000 in­di­rect job op­por­tu­ni­ties through con­trac­tors.” — Agen­cies

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