The search for more crude in the Mid­dle East con­tin­ues

The Star Early Edition - - BUSINESS REPORT - David Wethe

OPEC pro­duc­tion cuts have not slowed the search for more oil in the Mid­dle East.

Baker Hughes, which will soon be the world’s sec­ond-largest oil ser­vices provider, called the Mid­dle East a positive en­vi­ron­ment for ex­pected work in the first half this year. The re­gion was one of the main rea­sons the com­pany stopped a sales slide of seven straight quar­ters at the end of last year.

“There’s a bit of a dis­con­nect be­tween the Opec cuts that were an­nounced and what we’re fore­cast­ing at least for the next six months in terms of ac­tiv­ity,” Martin Craig­head, chief ex­ec­u­tive of­fi­cer at Baker Hughes, told an­a­lysts and in­vestors on Thurs­day on a con­fer­ence call.

“We see no pull back that would cor­re­late to the an­nounce­ment on a pro­duc­tion cut. We still ex­pect it to be rel­a­tively steady. A cou­ple pock­ets of the more mid­size to smaller play­ers in the Mid­dle East are ac­tu­ally go­ing to in­crease.”

The healthy out­look for drilling in the re­gion un­der­scores the tem­po­rary na­ture of the out­put cuts, and the po­ten­tial for pro­duc­tion to re­cover swiftly af­ter global prices re­bounded to above $55 (R738.76) a bar­rel.

The deal be­tween Opec and sev­eral non-mem­bers to re­duce sup­ply will last for six months be­fore be­ing re­viewed.

The big­gest source of the planned cuts is Saudi Ara­bia, which has said more than 80 per­cent of tar­geted re­duc­tion has been im­ple­mented. Some cus­tomers in the Mid­dle East haven’t wa­vered from their out­put goals for 2020 and 2025, he said.

The re­gion that in­cludes the Mid­dle East is Baker Hughes’ sec­ond-largest mar­ket in terms of rev­enue, trail­ing North Amer­ica. The com­pany that helps ex­plor­ers drill and main­tain oil wells boosted quar­terly sales for the first time since the end of 2014, thanks in part to year-end growth in the Mid­dle East, it said on Thurs­day.

The num­ber of ac­tive rigs in the Mid­dle East fell in De­cem­ber to the low­est since Au­gust 2013, Baker Hughes data show – Reuters


Saudi Ara­bia’s En­ergy Min­is­ter Khalid al-Falih ar­rives for an Opec meet­ing. His coun­try is the big­gest source of the planned cuts by the or­gan­i­sa­tion. More than 80 per­cent of the tar­geted re­duc­tion has been im­ple­mented.

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