‘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

New Straits Times - - Business World -

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.

BLOOMBERG PIC

Shale oil pro­duc­ers have out­lined am­bi­tious pro­duc­tion growth plans across the United States.

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