Opec seeks sustainable cooperation with other exporters

29/03/2018 05:38 AST

The Organization of the Petroleum Exporting Countries (Opec) is seeking "very long-term" cooperation with other crude exporters, the secretary general of the oil exporting group said on Wednesday.

Mohammad Barkindo was commenting on news that top Opec producer Saudi Arabia and non-Opec Russia were working on a long-term pact that could extend controls over world crude supplies by major exporters for up to 20 years.

Saudi Crown Prince Mohammed Bin Salman announced the plan in an interview with Reuters on Monday.

Russia, the world's biggest oil producer, has worked with the 14-member Organization of the Petroleum Exporting Countries in previous oil gluts to rein in supplies and push up prices, but a 10 to 20-year deal between the two would be unprecedented.

"We are looking for a very long-term cooperation between Opec and non-Opec producing countries," Barkindo told an energy conference in Baghdad.

Opec states, Russia and several other non-Opec producers agreed to cut supplies from January 2017 to lift oil prices that plunged from above $110 a barrel in 2014 to below $30 in 2016.

A deal to extend the pact, which has boosted prices to around $70 now, was agreed in November. The output cuts are now due to run until the end of 2018. "In addition to the 24 countries that came to sign the declaration of cooperation in November, we have six more producing countries who came to show solidarity," he said.

Several oil exporters have suggested a six-month extension to the supply pact, Iraqi Oil Minister Jabar Al Luaibi told the conference, without identifying the countries.

Regarding Iraq's own resources, the minister said Opec's second-largest producer might have oil reserves twice as big as indicated by current estimates of about 150 billion barrels.

He said the crude market was stabilising and prices had "improved", adding that a decision on whether to extend cuts beyond 2018 depended on meetings to be held by the exporters by the end of this year.

Barkindo said Opec was evaluating the impact of the supply pact to determine the "appropriate action" when it expired. In addition, he said investment in the oil industry was increasing as oil prices recovered but had not yet reached the level before the downturn in 2014.

Saudi Aramco deal

Saudi Aramco finalised a deal on Wednesday with Malaysian state energy company Petroliam Nasional Berhad (Petronas) to invest in a refinery project off Malaysia.

Saudi oil giant Aramco agreed in February last year to buy a $7 billion stake in Petronas's Petrochemical Integrated Development (RAPID) project, but the issue was then delayed by "technical issues".

RAPID is a $27 billion project located between the Malacca Strait and the South China Sea.

The Gulf Today