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OPEC delays decision to cut production until Dec. 28
by The Associated Press
OPEC oil producers say they will wait until an emergency meeting at the end of the month to make a final decision on whether to proceed with production cuts in the new year.
“In the light of the welcome, positive decision announced by Norway on Monday to cut its oil output by 150,000 barrels per day from Jan. 1 to June 30, as well as other similarly positive statements of support issued earlier by a number of major oil producers, OPEC oil and energy ministers will meet in Cairo, Egypt, on Dec. 28 … to discuss the implementation of the organization’s decision to reduce output,” the group’s official news agency, Opecna, said Dec. 18.
Norway’s oil ministry said Dec. 17 it would cut crude output 150,000 bpd from Jan. 1 to June 30 to meet demands by OPEC that non-OPEC producers join the cartel in propping up crude prices by cutting production by 500,000 bpd.
Norway is the world’s third largest crude exporter.
Earlier this month, Russia, the world’s second largest crude exporter, pledged to cut its oil exports by 150,000 bpd from Jan. 1 to June 30. Mexico and Oman have also promised to curtail their production.
Russia’s commitment uncertain Norway’s decision may signal the end of a two-month deadlock over non-OPEC compliance, despite the fact total non-OPEC cuts are 52,500 bpd shy of 500,000 bpd target demanded by OPEC to trigger 1.5 million bpd of cartel cuts between Jan. 1 and June 30.
OPEC delegates said the organization will not quibble over the small shortfall. But some senior OPEC officials, especially some from Saudi Arabia, remain unconvinced that Russia really intends to cut crude exports or that it may offset them with increased products exports. The ministers want reassurances from Moscow on the criteria for Russia’s production cuts.
Russia’s two largest oil companies are at odds on the subject of production cuts. Earlier this month, Yukos, Russian’s second largest oil company, said it wanted to use peak export levels as the base from which to cut and would increase its products exports to offset the drop in crude exports.
Vagit Alekperov, president of Lukoil, said Dec. 18 he was confident Moscow would honor its pledge. Lukoil is Russia’s top oil company, accounting for 20-22 percent of the country’s 150,000 bpd reduction.
Norway offers qualified commitment Norway’s commitment is contingent on the cooperation of the other non-OPEC countries. The Norwegian oil and energy ministry said his country would suspend the cuts “if other countries do not implement announced measures, if the measures do not have the desired effect or if our evaluation of the oil market situation deems it necessary.”
OPEC, which produces approximately 40 percent of the world’s oil, has cut production by 3.5 million bpd so far this year.
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