OPEC will try to give themselves to cut production - Reuters News 22-SEP-2016
OPEC will try to give themselves to cut production - Reuters News
22-SEP-2016 11:57:43 AM
Talks next week in Algiers
A reduction in production would be a first since 2008
Iraq considers that the circumstances are favorable
Saudi and Iranian experts are already negotiating in Algiers
Russia suggests a possible reduction of its pumping
by Rania El Gamal and Alex Lawler
DUBAI / LONDON, Sept. 22 (Reuters) - OPEC could end next week in Algiers an agreement to reduce its total production of crude oil, which would be a first in eight years, say several officials of the organization and sources inside thereof.
Discussions between member countries and with Russia - which is not a member of the Organization of exporting countries - must take place on the sidelines of an international energy conference in Algiers on the basis of a widely shared assessment : between 45 and 50 dollars, the price of oil remains low.
Saudi Arabia and Iran, longtime rivals in the oil market as in the diplomatic arena, emit sometimes conflicting signals about their willingness to cooperate, as Russia.
Behind the scenes, OPEC's experts are working to finalize details of a production limiting agreement likely to raise the price of oil while allowing for the Oil ministers who sign the declaring victory in their country .
"This time, I think (the situation) is a little different because the circumstances are a little more favorable," said Falah Alamri Thursday, the Iraqi governor to OPEC.
Iraq, Saudi Arabia, Iran and Russia have each brought their production to its highest level in a year in an attempt to strengthen their market share.
Iraq is considered one of the main obstacles to an agreement on the production because he wants to further increase its own next year. Russia and Iran, they have probably reached a peak in production while Saudi Arabia has not demonstrated that it could produce more than today.
IRAQ POSTER SA GOODWILL
But Falah Alamri ensure that Iraq does not barrera road compromise. "We do not intend to flood the market, we intend to support the market (...) We will not participate in any initiative that would lead to lower prices," he said.
A first attempt at compromise failed in the spring, Saudi Arabia has demanded that Iran contributes to the collective effort, which Tehran has refused, arguing that the need to reduce its pumping to their level before international sanctions lifted earlier this year.
Iranian production has stagnated in recent months but Tehran still insists on the need to use exemptions if agreed at the OPEC.
Several sources reported that Saudis and Iranians had been discussions in Vienna this week to try to sketch together the outlines of a compromise.
"It seems they all want to reach some form of consensus in Algiers. This is seen in the number of diplomatic meetings that take place. There is a real momentum," said a source in OPEC.
Other sources said the production figures which would apply a gel or a drop of pumping were central to the debate.
OPEC is indeed working with two different sets of figures: the estimates given by the member countries themselves and those established by independent experts, the "secondary sources".
PRODUCTION OF REFERENCE, KEY ELEMENT OF BUSINESS
These are considered closer to production reality and the Gulf producing countries insist they serve as reference for any agreement to allow better monitoring of production levels, said several sources.
A source added that if production was frozen at the level observed early in the year or the average of the first six months of 2016, this would represent a de facto decrease from current levels.
"Logically, this could be considered a discount (everyone) agreed to use secondary sources," said she said.
Several other sources said that Libya and Nigeria could benefit from exemptions, their production is currently limited by disturbances.
OPEC is currently producing about 33.5 million barrels per day (bpd), Russia and the United States 10 million to 11 million bpd each. These high levels have led to the accumulation on the world market of stocks which today exceed three billion barrels to a sustained rise in prices.
Algerian Oil Minister said that the overall supply should be reduced by at least one million bpd. Russia, she says ready to cut production by 5%.
The secretary general of OPEC said meanwhile that a possible agreement limiting production should remain in force until October 2017.
Amrita Sen, the Energy Aspects cabinet, a reduction of one million bpd of OPEC production would reduce global inventories from 290 to 330 million barrels a year even if the rise in prices favored a resumption of production US.
(With Dmitry Zhdannikov; Marc Angrand for the French service, edited by Veronique Tison)
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