Focus on cutting costs, improving margins, energy minister says
Al Mazroui considers the price which incentivises the investors to come back is the right price
The oil producers need to focus on optimising resources to cut costs and improve margins and not just focus on oil prices, energy minister Suhail Mohammad Faraj Al Mazroui, said yesterday.
Oil prices have fallen more than 50 per cent from the high of over $120 (Dh441) per barrel in 2011, causing oil producers to shelve new unprofitable investment plans.
“I believe we need to concentrate on efficiencies than the price. I disagree with anyone who says that efficiencies is against producers,” Al Mazroui told delegates at a conference.
“We are investing in higher efficiencies and keen to reduce the cost. It’s the margin that you get at the end of the day. We are not after price, but we are after net margins for us to incentivise,” he added.
Taking a different approach, the minister said there needs to be a collaborative approach between all the oil producers working together with consumers.
“The consumers today are investors in the countries where oil is produced, so they have an incentive rather than just being a consumer. China, India, Korea, Japan are all partners with Abu Dhabi in upstream and they have their share. This is a new era of new collaboration between consumers and producers,” he added.
He also stressed on the need to get the right price, that can act as an incentive.
The right price
“The right price would be the one which incentivises the continuity to drill more to balance the natural decline in reservoirs and to ensure we cover the growth in demand,” he added.
He said they are not targeting any price. “We will live with a fair price for the market,” Al Mazrouei said.
Al Mazrouei expects healthy demand from Africa and Asia going ahead
“Africa’s demand will grow much higher than the rate we see today. Some Asian countries are increasing their industrial capabilities. We are happy with the demand, and we think demand would be healthier in the future,” he said.