‘NO FREE RIDES FOR U.S. FIRMS’
Shale producers told not to assume Opec will extend oil output curbs to offset their rising production, say sources
SENIOR Saudi energy officials told top independent United States oil firms in a closed-door meeting this week that they should not assume the Organisation of the Petroleum Exporting Countries (Opec) grouping would extend output curbs to offset rising production from the US shale fields, said two industry sources.
Oil producers led by Saudi Arabia and top non-Opec member Russia are in an uneasy truce with US shale firms after a twoyear price war that sent many shale producers to the wall.
The Saudis and Russia led a deal to curb output late last year to end a global supply glut that pushed oil prices to a 12-year low.
The resulting rise in oil prices has sparked a rush of new output by shale producers, who this week outlined ambitious production growth plans across the US.
Speaking at an industry conference, here, on Tuesday, Saudi Arabia’s energy minister Khalid al-Falih said there would be no “free rides” for US shale producers benefiting from the upturn.
Falih’s senior advisers went a step further at the meeting on Tuesday evening with executives from Anadarko, ConocoPhillips, Occidental Petroleum Corp, Pioneer Natural Resources, Newfield Exploration and EOG Resources.
“One of the advisers said Opec would not take the hit for the rise in US shale production,” said a US executive. “He said we and other shale producers should not automatically assume Opec will extend the cuts.”
The Saudis called the meeting to exchange views on the market and to gauge the outlook for shale output, said the sources.
The meeting came after Opec secretary-general Mohammed Barkindo met hedge funds and shale producers, here, seeking to widen talks on how to tame the global glut.
Shale oil producers have outlined ambitious production growth plans across the United States.