EMEA News
Compliance, Not Annual Maintenance, Emphasized as Reason for November OPEC Output Fall
The Organization of the Petroleum Exporting Countries (OPEC) made headlines once again with a Reuters survey showing that its output in November fell by 300,000 barrels per day (bpd) to its lowest since May, due to a drop in Angolan and Iraqi exports.
The reduction is also said to be due to high compliance: Reuters notes that "OPEC's adherence to pledged supply curbs rose to 112 percent from October's 92 percent.....top exporter Saudi Arabia pumped below its OPEC target, as did all other members except Ecuador, Gabon, and the United Arab Emirates."
Angola exports falling to a 13 month low due to field maintenance was responsible for 100,000 bpd of the 300,000 bpd drop; Iraq's exports and output fell when it took control of oilfields from Kurdish fighters; and other factors contributing to the decline include Venezuela's production rate not meeting its OPEC target and Algerian output declining because of oilfield maintenance.
Although the bulk of the declines could not truly be attributed to a commitment to the OPEC cutbacks, respected analysts are still inclined to believe OPEC rhetoric and the notion that its members are dedicated to the greater good rather than their own interests: Tamas Varga, strategist for PVM Oil Associates, stated, "Based on the recent past we can start the New Year with relative optimism as far as conformity is concerned."
Figures from a Bloomberg survey about OPEC performance in November match those of Reuters, and the news agency notes that "the 12 OPEC members who agreed to curb their supply implemented 118 percent of their pledged cuts in November, compared with 110 percent the month before."
Riding on this upbeat wave was Khalid al-Falih, energy minister for Saudi Arabia, who on Monday told media that although oil producers might start discussing in June when to raise output once the market outlook was clearer, "we will not alter our course in the second half of the year."
He added, "We will not let go of our current approach until we reach a balanced market," and "there will be plenty of supply to respond to any need."
Falih made these remarks on the same day he announced that his kingdom has invited U.S. firms to take part in developing its civilian nuclear power program via a consortium that would build two nuclear reactors; KACARE, the King Abdullah City for Atomic and Renewable Energy, is the Saudi government agency tasked with the nuclear plans.
Falih said, "We hope that the two paths will converge - the commercial, technical discussions between KACARE and the American companies, while we work with our counterparts on the American side to address the regulatory and policy issues."
Supposedly, the Saudis want nuclear power to diversify its energy mix and allow it to export more crude rather than burning it to generate electricity; Falih declared, "Not only are we not interested in any way to diverting nuclear technology to military use, we are very active in non-proliferation by others."
Last week, shortly after the ink dried on the OPEC cutback extension deal, the Saudis - who repeatedly insisted OPEC's initial cutbacks had largely solved the supply glut - adjusted their opinion and, along with Russia, mused that a market rebalance would not occur until at least the third quarter of 2018.
