Russia’s energy minister met with counterparts from Saudi Arabia and other Arab Gulf oil-producers to discuss steps to stabilize crude markets amid OPEC’s drive to win cooperation from the biggest supplier outside the group in limiting output to prop up prices.
Ministers from Saudi Arabia, Kuwait, Bahrain, Qatar and the United Arab Emirates gathered in Riyadh for oil talks at the offices of the Gulf Cooperation Council secretariat. Russian Energy Minister Alexander Novak met with them later on Sunday for a separate round of talks and was expected to speak afterward at a news conference. Oman was the only one of the GCC’s six members not attending.
“Oil markets are on the way to being re-balanced,” Saudi Arabia’s Energy and Industry Minister Khalid Al-Falih said at the start of the GCC meeting. “Low oil prices are putting pressure on GCC countries’ development plans.” Russia was invited to attend the Gulf ministers’ talks, he said. “We are working with Russia and other oil producers to stabilize the market.”
Novak is set to meet representatives of the Organization of Petroleum Exporting Countries on Monday in Vienna for talks that could include production cuts, and officials from Russia and Saudi Arabia will hold bilateral discussions later this month. While Russian President Vladimir Putin has pledged to cooperate with OPEC, he’s been vague about whether the country will trim output or just freeze production at September’s post-Soviet record.
OPEC is seeking to attract other producers to join the plan it agreed to last month at a meeting in Algeria to put into effect the group’s first output cuts in eight years. Crude plunged to a 12-year low in January, squeezing the budgets of producers from Venezuela to Saudi Arabia. The price slide led OPEC to abandon its two-year-old Saudi-led policy of allowing members to pump as much as they could in an effort to protect market share.
“We hope that they can reach an overall agreement on which Russia and other non-OPEC producers will join and cooperate with OPEC members,” Iranian Oil Minister Bijan Namdar Zanganeh told reporters on Sunday in Tehran.
Iraq asked OPEC for an exemption from participation in any cuts, Oil Minister Jabber Al-Luaibi said Sunday at a news conference in Baghdad. He cited Iraq’s war against Islamic militants as the reason the country should be grouped with Iran and Nigeria as members not required to contribute to the collective cuts OPEC agreed on last month in Algeria.
Record Output
Russia is producing about 10.9 million barrels a day on average this year, according to Energy Ministry data. Officials have emphasized the nation’s ability to keep pumping; the latest draft of Russia’s energy strategy sees a potential increase in annual production from 534.1 million metric tons last year to 555 million tons, or 11.1 million barrels a day, by 2020.
OPEC’s 14 members pumped a record 33.75 million barrels a day in September, with the Saudis accounting for 10.58 million barrels, according to data compiled by Bloomberg. Output in Saudi Arabia, the group’s biggest producer, fell short of the 10.66 million-barrel-a-day record in July, the data compiled by Bloomberg show.
Brent crude, the global benchmark, has gained almost 40 percent this year, trading at about $52 a barrel last week. OPEC is trying to determine which members will reduce their output and by how much, with details to be made final at the group’s Nov. 30 meeting.
Mexico supports an extension of OPEC’s supply cuts as a way to stabilize oil markets and bring fresh investment into the country’s growing energy sector, the Mexican deputy secretary for hydrocarbons said on Tuesday.
Aldo Flores-Quiroga said he believed members of the Organization of the Petroleum Exporting Countries should and would continue plans to coordinate oil production cuts into at least 2018. He did not say whether he preferred a six- or nine-month extension, which OPEC members are debating.
«Stable markets help provide a stable framework for investment, and that helps Mexico,» said Flores-Quiroga, who assumed his post last summer.
Oil ministers from OPEC and non-member producers meet on Thursday in Vienna.
Mexico, which is not in OPEC, has seen its oil industry atrophy in the past 50 years due to underinvestment and hostile regulation of foreign partners.
Constitutional changes in 2013 have slowly begun to attract capital to the second-largest Latin American economy, but low oil prices have hindered Mexico City’s efforts.
Exxon Mobil Corp, for example, plans to invest $300 million in retail filling stations through the next decade in Mexico, but will import fuel due to a lack of local crude supply and refining capacity.
(Reporting by Ernest Scheyder; Editing by Dale Hudson)
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