All talk, no action by oil producers in Vienna
london/moscow — Opec’s internal disagreements over how to implement oil supply cuts agreed to last month prevented a deal to secure the cooperation of other major suppliers.
More than 18 hours of talks over two days in Vienna yielded little more than a promise that the world’s largest oil producers would keep on talking. Discussions will continue in late November, just days before the Organisation of Petroleum Exporting Countries is supposed to finalise the accord that lifted oil prices to one-year highs.
Non-Opec nations ended talks with the group on Saturday without making any supply commitments, Brazil’s Oil and Gas Secretary Marcio Felix said after the meeting. Brazil won’t restrict its oil production, though it’s willing as early as next year to host future Opec conferences with the world’s biggest producers, he said.
Azerbaijan’s Energy Minister Natiq Aliyev said the outcome of the process hinges on Iran and Iraq, two nations that are more interested in increasing production than reducing it. While Saturday’s meeting was a successful “first step”, oil-producing nations need to continue
Anything short of implementation of this accord could lead to the elongation of the rebalancing process, with further deterioration of financial conditions and setbacks in investments dialogue and “come up with real numbers” before cuts can begin, Kazakhstan’s Deputy Energy Minister Magzum Mirzagaliyev said after the meeting.
Risk of failure Mohammed Barkindo, Opec secretary-general
A deal wasn’t possible because internal Opec talks on Friday reached an impasse over the role of Iran and Iraq, both of which want to be exempt from any cuts. While nonmember Oman said on Saturday it was willing to cooperate in a supply deal, it couldn’t commit to a specific output cut until Opec had its own agreement.
Opec’s surprise agreement in Algiers to make the first supply cuts in eight years will only make a serious dent in a record oil surplus if producers outside the group join in. While the accord helped push oil prices to a 15-month high above $50 a barrel earlier this month, they have subsequently fallen as several members disputed the production estimates that would determine the size of cuts. Failure to implement last month’s accord will hurt oil producers, the organisation’s top official warned.
Opec agreed in the Algerian capital on September 28 to reduce output to a range of 32.5 million to 33 million barrels a day, compared with about 33.4 million in September. Friday’s meeting of technical experts from members of the group was intended to finalise details of how those supply curbs would be shared. Talks with non-Opec nations on Saturday sought to seek wider participation in cuts.
No limits
None of the countries that attended Friday’s meeting specified how much they are willing to cut, said one delegate, who asked not to be identified because the meeting was private. Progress was made on the methodology to be used for allocating individual production curbs, the delegate said.
On Saturday, no concrete output limits for non-Opec countries were discussed. Attendees did discuss differences between nations’ own oil-production data and sources used in Opec’s own estimates, which have been disputed by members barrels of oil were pumped by the Opec in September barrels of oil is Russia’s current daily output including Iran, Iraq and Venezuela, one of the people said.
Russia reiterated that it is willing to freeze production, rather than cut, but only if there is an internal Opec agreement first, the people said. The largest producer outside Opec is pumping at a post-Soviet record of about 11.1 million barrels a day.
‘Maximum commitment’
As the meeting opened in Vienna, Opec secretary-general Mohammed Barkindo warned of the consequences if producers don’t follow through on the Algiers agreement. The price recovery has already taken far too long and producers can’t risk delaying it further, he said.
“Anything short of implementation of this accord could lead to the elongation of the rebalancing process, with further deterioration of financial conditions and setbacks in investments extending into a third year, which would be unprecedented,” Barkindo said, according to a transcript of his speech posted on Opec’s website. “We should be calling for maximum commitment from all Opec and non-Opec countries.”
Representatives of Azerbaijan, Brazil, Kazakhstan, Mexico, Oman and Russia attended Saturday’s meeting with officials from Opec member states. — Bloomberg