Home' Trinidad and Tobago Guardian : June 1st 2017 Contents JUNE 1 • 2017 guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
OPEC, non-OPEC committed to
cutting inventories to 5-year average
OPEC and non-OPEC countries are com-
mitted to bringing global oil inventories
down to the industry's five-year average,
Saudi Energy Minister Khalid al-Falih said
on Wednesday, adding he saw the target
being reached in the very near future.
Speaking in Moscow after a meeting be-
tween OPEC and Russia, Falih and his Rus-
sian counterpart Alexander Novak also said
they saw their co-operation in oil markets
lasting after the current joint oil output
agreement expires in March next year.
"Our joint declaration with Russia con-
cluded that while the rebalancing goal is on
its way to being achieved, more needed to be
done to draw inventories towards the five-
year average," Falih said.
Falih reiterated his country's position to
do "whatever it takes" along with Russia to
help stabilise the oil market, signalling an
open-ended policy to reduce the inventory
overhang and balance the market.
"It is necessary to work out new framework
principles for continued steady co-operation
between OPEC and non-OPEC even after
the expiration of the Vienna agreements,"
Novak said on Wednesday.
Last December, Russia and 10 other non-
OPEC nations agreed to join OPEC's output
cuts for the first time in 15 years. Last week,
OPEC and non-members led by Moscow
agreed to extend cuts in output by a further
nine months to March 2018.
Oil prices dropped more than four per
cent after the decision as the market had
been hoping oil producers could reach a
last-minute deal to deepen the cuts or extend
them further, until mid-2018. On Wednes-
day, global benchmark Brent crude futures
were down 52 cents at US$51.32 a barrel by
Both Moscow and Riyadh said cooper-
ation would continue beyond the current
agreement as both countries were still trying
to find ways to co-exist with US shale oil
producers, which are not part of the global
output reduction deal.
"I attended a meeting of the Saudi and
Russian leadership at the Kremlin during
which both our nations renewed their de-
termination to rebalance the global crude
oil market in the interest of greater market
stability and restated our commitment to
doing whatever it takes to attain those goals,"
President Vladimir Putin met with Dep-
uty Crown Prince Mohammed bin Salman
on Tuesday in Moscow where both hailed
their growing partnership in oil markets and
dialogue on Syria in a departure from past
hostilities between the top global producers
and major players in the Middle East.
BP to sign Azerbaijan oilfield extension deal at end of June
British oil company BP expects to sign a
contract at the end of June extending its pro-
duction sharing deal for Azerbaijan's biggest
oilfields until 2050, the company's regional
head said on Wednesday.
The existing deal is due to expire in 2024
and BP-led consortium and Azeri state oil
firm SOCAR signed a letter of intent in De-
cember to continue developing the giant
Azeri-Chirag-Guneshly (ACG) offshore fields
"End of June is a very reasonable time for it,"
Gary Jones, BP's regional head for Azerbaijan,
Georgia and Turkey, told reporters when asked
when the contract was due to be signed. "It's
a big deal. We want to get it right."
The shareholders in the consortium include
BP, SOCAR, Chevron, INPEX, Statoil, Exxon-
Mobil , TPAO, ITOCHU and ONGC Videsh.
Azeri President Ilham Aliyev said on
Wednesday he expected the contract to be
"We are thinking about development of the
ACG bloc and I think we will reach a final
agreement with investors," Aliyev said at the
annual Caspian Oil & Gas conference in Baku.
BP came under fire from Aliyev earlier this
decade when the country's leader criticised
the oil firm for lower than promised output
levels. Oil output at ACG totalled more than
7.1 million tonnes in the first quarter of this
Mexico oil, gas
6% in 2016
Mexico's hydrocarbon reserves shed six per cent
last year to 16.77 billion barrels of oil equivalent, the
country's energy industry regulator CNH said yes-
terday, as quoted by Reuters. The decline came in
spite of an increase in crude oil discoveries because
of a drop in new gas deposit discoveries, CNH said.
The six-per cent decline concerns so-called P2 re-
serves: proven and probable. P3 reserves, which also
include possible oil and gas content in prospective
deposits, also fell in 2016, by 1.1 per cent to 25.86
billion barrels of oil equivalent.
At the moment, Reuters notes, Mexico is pumping
a bit more than two million barrels of oil daily and
needs a 100-percent replacement rate of its reserves
to just maintain it.
The country, however, has plans to boost this to
more than 2.6 million barrels -- the rate, at which
Brazil was pumping oil as of last October.
As part of these plans, earlier this month Mexi-
co's deputy energy minister Aldo Flores Quiroga an-
nounced that the ministry has invited oil companies to
suggest offshore deposits they would like to develop.
The nominations are due to be announced in June,
and the blocks will be tendered in December---a year
after Mexico awarded exploration licenses for nine
offshore blocks to companies such as Chevron, BP,
Exxon, and the China National Offshore Oil Corp,
as well as Statoil and Petronas.
Both tenders, as well as a breakup of the monopo-
ly position of state-owned Petroleos Mexicanos, are
part of government efforts to liberalise the country's
energy market and make better use of local mineral
The decline in new discoveries has a direct link
to Pemex's dethroning as a monopoly. As a result of
the change, the company has had to make significant
cost cuts since 2014, which, combined with the oil
price crash, seriously affected its financial capacity
to invest in new exploration. OilPrice.com
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