Opec eyes price pact with shale producers
houston — The world’s largest oil producers appealed to US shale producers to join their efforts to hold global prices at their current level at a major energy conference on Monday, as the boom in shale is continuing to undermine Opec’s production curbs.
Opec Secretary General Mohammed Barkindo said on Monday at the CERAWeek conference in Houston that there is a “common understanding” between oil-producing nations and US shale producers that “we all belong to this industry,” even as US exports have eroded Opec’s market share over the last year.
This year’s CERAWeek conference continues outreach between the Organisation of the Petroleum Exporting Countries and shale producers. Members of Opec met with shale producers on Monday evening at a dinner for the second year in a row, though Barkindo said that price levels and production were not discussed.
However, shale’s surge in the last year was heavy on the minds at the Houston conference, particularly as US production surged to an all-time record late last year. Nigeria’s oil minister Emmanuel Ibe Kachikwu was more explicit than Barkindo, saying that oil majors operating in both shale fields and in Opec members should bear some responsibility for prices.
“We need to begin to look at companies that are very active in these areas and begin to get them to take some responsibilities in terms of stability of oil prices,” Kachikwu told Reuters on the sidelines of the CERAWeek energy conference in Houston, though he did not name any specific companies. “Some of the same companies that are working in shale are the same companies working in Opec (member countries).”
The price of oil rose steadily throughout 2017 in the wake an agreement between the Organisation of the Petroleum Exporting Countries and non-members including Russia, to cut production by 1.8 million barrels a day beginning last year.
That surge in prices, however, boosted US production sharply, which hit a record in November 2017 at more than 10 million barrels a day and is expected to surpass 11 million barrels a day later this year. Going forward, Fatih Birol, head of the Paris-based International Energy Agency said here in Houston that shale growth may continue to rise regardless of Opec policies — warning that larger producers may need to reconsider their future growth given “huge growth” in shale.