Saudi Arabia, Venezuela, Kazakhstan optimistic on 2018 crude oil fundamentals
Oil ministers from four major oil producing countries — Saudi Arabia, the UAE and Venezuela of OPEC, and Kazakhstan — said, after meetings in Astana, market fundamentals were pointing to a more bullish 2018 and agreed output cuts could be extended past their March expiry if conditions warrant.
Saudi energy minister Khalid al-Falih met with Venezuela’s new oil minister Eulogio Del Pino, and separately with Kazakhstan’s energy minister Kanat Bozumbayev, in the Kazakh capital Saturday, according to statements from the Saudi energy ministry.
Falih then met UAE counterpart Suhail al-Mazrouei, the Saudi ministry said in a statement Monday.
The officials “expressed satisfaction with improving market fundamentals, accelerated by the collective efforts of OPEC and non-OPEC producers under the Vienna Declaration of Cooperation [and] agreed that an extension of the declaration beyond March 31, 2018, may be considered in due course as fundamentals unfold,” the statement said, referring to the OPEC/non-OPEC production cut agreement.
All options were open in the voluntary rebalancing efforts, the producers were quoted as saying.
OPEC and 10 major non-OPEC producers led by Russia agreed last December to cut a combined 1.8 million b/d in output through June 2017 to rebalance the market and induce draws of oil in storage. This was subsequently extended to March 2018.
Saudi Arabia has led the way cutting production, with output in August at 10.01 million b/d, according to the latest S&P Global Platts OPEC survey released Thursday.
It averaged 9.971 million b/d over January to August, some 87,000 b/d under its allocation of 10.058 million b/d.
Venezuela produced 1.90 million b/d in August and averaged 1.947 million b/d over the same period, putting it 25,000 b/d under its allocation.
Kazakhstan’s crude and condensate output growth accelerated to 1.742 million b/d in July, 62,000 b/d above its commitment to bring output to 1.68 million b/d.
It has struggled to meet its obligations due mainly to increased production from Kashagan, which averaged 200,000 b/d in July, as well as the Karachaganak field. Output cuts at mature fields have been unable to help trim the country’s total production.
Despite the “gradual” ramp up of the giant Kashagan field this year, Bozumbayev was quoted as saying Kazakhstan was able to achieve more than its full commitment to its agreed production cuts in August by reducing output at other fields.
A similar production level is also anticipated for September, according to the statement.
As for the UAE, Mazrouei reiterated Abu Dhabi National Oil Co.’s commitment to cut crude allocations by 10% in September and October.
“The company will be notifying its customers and the market, on a monthly basis, of the actual changes to its lifting schedule in an effort to demonstrate transparency and enhance credibility around UAE’s conformity with its targeted production under the Declaration of Cooperation,” the statement said.