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Deeper OPEC Cuts Would Help Shale, Former Qatar Minister Warns

Published in Oil Industry News on Monday, 17 July 2017


Graphic for News Item: Deeper OPEC Cuts Would Help Shale, Former Qatar Minister Warns

OPEC would hurt itself and help U.S. shale producers if it adopted deeper cuts, the former oil minister of Qatar warned.

"It’s not beneficial for OPEC to deepen their cuts because prices will go up and shale oil producers and others will take OPEC’s market share," Abdullah al-Attiyah said in interview in Istanbul. “The problem is that there is someone waiting in the dark corner for OPEC -- it’s shale oil producers and whenever prices rise, they raise production.”

The Organization of Petroleum Exporting Countries and Russia’s quest to rebalance the oil market through a deal to curb production have failed to sustainably boost prices. Resilient U.S. shale output and rising production from Libya and Nigeria -- OPEC members exempt from cutting -- have diluted the group’s efforts and global inventories remain well above the five-year average.

"This is a new situation for the oil market,” al-Attiyah said. “Traditionally, it was always oil competing with other sources like coal or renewable, but today it is a fierce war” between conventional and unconventional oil resources.

American barrels

The former minister highlighted the U.S. shale companies’ ability to adjust to lower crude prices, reducing their breakeven costs by more than half to below $40/bbl. He also warned that a “huge quantity” of additional barrels is likely to come from the U.S. following the expansion in number of rigs drilling for oil, which has risen to a two-year high, according to data from Baker Hughes Inc.

"It’s clear that there is more crude from the U.S., they are now even exporting crude oil,” he said.

His comments came as the International Energy Agency said Thursday that the rebalancing of the global oil market has become less certain. OPEC’s production rose to 32.6 MMbpd, the highest level this year, as the group’s compliance with its pledged reductions slipped to 78%, the lowest rate this year, the IEA said.

For al-Attiyah “OPEC’s compliance rate is good. You shouldn’t expect 100%.”

He dismissed the possibility that a diplomatic rift between Qatar and its Persian Gulf neighbors, including OPEC-members Saudi Arabia and the United Arab Emirates, could undermine the production deal.

Source: www.worldoil.com

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OPEC Oil and Gas, OPEC, Global Oil and Gas, Saudi Oil and Gas, Iran Oil and Gas, Russian Oil and Gas, Oil Price Freeze, Oil and Gas News








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