Al Falih discusses extension of oil cuts

Saudi minister in talks with Venezuelan and Kazakh counterparts ahead of Opec meeting in November

Saudi Arabia’s Energy Minister Khalid Al Falih discussed with his Venezuelan and Kazakh counterparts the possible extension of the global oil supply cut pact beyond March 2018, the Saudi energy ministry said on Sunday.

Opec and other producers, including Russia, have agreed to reduce output by about 1.8 million barrels per day until next March in a bid to reduce global oil inventories and support oil prices.

A further extension for at least three more months beyond March is now being discussed before Opec meets again in November.

The deal to curb output propelled crude prices above $58 (Dh213) a barrel in January but they have since slipped back to a $50 to $54 range as the effort to drain global inventories has taken longer than expected.

“Both countries agreed that the option to extend the voluntary market rebalancing effort, beyond the first quarter of 2018, would be considered in due course as market fundamentals may dictate,” the ministry said in a statement on Al Falih’s meeting with Kazakh Energy Minister Kanat Bozumbayev. Non-Opec Kazakhstan is aiming for a standalone deal with Opec on restraining its crude production due to a need to crank up output at its Kashagan field, a Kazakh official said last week.

Needs to adjust terms

The Central Asian nation increased oil and gas condensate output by 9.9 per cent in January-July to 1.724 million bpd, exceeding its quota of 1.7 million bpd under the cut pact.

Kazakhstan has said it needs to adjust the terms of the deal as it expects to boost output later this year thanks to the giant Kashagan field. The Saudi Energy Ministry said that Bozumbayev, who met with Al Falih on Sunday, said despite the gradual ramp up of the Saudi Arabia’s Energy Minister Khalid Al Falih agreed with his UAE counterpart that an extension of a pact on global oil supply cuts beyond March 2018 may be considered depending on market fundamentals, the Saudi ministry said in a statement on Monday.

Falih and Suhail Mohammad Faraj Al Mazroui, UAE Minister of Energy, held a meeting in Astana, the statement said. During the meeting al-Mazroui said that Abu Dhabi National Oil Co (Adnoc) has cut crude allocations by 10 per cent in September and October, according to the statement. Kashagan field this year, “Kazakhstan was able, through reducing production in other fields in August, to achieve more than full conformity” with its output cut target.

“A similar production level is also anticipated for September,” the Saudi ministry said.

Al Falih, who has held his meetings in Astana, also met Venezuelan Oil Minister Eulogio Del Pino and they “agreed on the importance of leaving all options open” including the possible extension of the oil output cuts beyond the first quarter of 2018, if needed, according to a separate statement.