Kuwait, Oman urge producers to cooperate over output cuts
OPEC chief hails Amir’s role • Kuwait to raise non-associated gas production
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