OSLO, 1 February. /Corr. Yuri Mikhailenko/. An agreement on the reduction of production volumes between the world’s largest oil producers is possible, however, to make concessions to have to agree with all parties. This opinion is shared by the interviewed Norwegian experts.
Media: Saudi Arabia did not initiate the reduction of oil production volumes
“In a situation where the price of a barrel of oil hovering around $30, to negotiate a decline in production is much easier than at a price of $70, which was observed in the middle of last year, said a leading analyst of investment Department of the Norwegian Bank DNB thorbjørn Chus. – However, in order to reach a real understanding, certain safeguards will have to be Iran. If this happens, you can count on the involvement of Saudi Arabia. Iraq now seems to be also considering to reduce production. When the willingness of all parties to make concessions there is a good chance to achieve results, but the main obstacle I see to this position of Iran.”
According to experts, Norway will not cut oil production, in the last 15 years the government of the Kingdom had not even considered this possibility. However, as noted by Chus, Norway’s position does not matter, so as to reduce production at its offshore market would almost not felt. In 2015 on the Norwegian shelf at the surface was raised a little more than 570 million barrels of oil, which is relatively few compared to 4 billion barrels produced during the same period in Russia and 3.7 billion barrels in Saudi Arabia.
“Norway has no tradition of cooperation with the Organization of countries-exporters of oil (OPEC) to reduce production, and I don’t think something similar will happen this time,” he said.
He believes that the decline in production in Norway can be expected only if prices fall to $10 per barrel.
“Operating expenses for the production of 1 barrel of oil on the Norwegian continental shelf are $10-12, on investments now, nobody is talking, so if you price above $10, we can maintain production at the expense of cash flow,” said Chus.
The sharp increase of prices will not
Senior partner and Director of Analytics at Norwegian consulting company Rystad Energy Per Magnus AS Newsweek shares the opinion of his colleague.
The ability to reduce oil production by 5%, but it will be difficult to negotiate
“From Norway targeted reduction of production should not be expected, this is confirmed by the Ministry of petroleum and energy. However, volumes may be reduced due to the prevention and repair, which in 2015 many companies on the Norwegian continental shelf were postponed, – said the Agency interlocutor.
He noted that the Arab States really does signal that there are some ready to cut its prey.
However, according to Nysveen, the decline in production in Saudi Arabia and the Russian Federation at once by 5%, amounting to 1 million barrels a day, is hardly possible.
“This is a very large amount. Even if such agreement is forthcoming, the pressure on prices will be too strong, and OPEC is not interested in a drastic growth, to retain the occupied share of the world market, he said. – Moreover, in Russia in the coming year purely for economic reasons to expect a leveling or slight decrease in production volumes, even if no centralized solution will not be accepted. It will also lead to higher prices”.
The February meeting
Last week Minister of energy Alexander Novak declared his readiness to personally take part in the upcoming February meeting of OPEC and other oil producers. The subject of consultations could be to reduce production to 5% of each of the countries, the Minister said.
OPEC yet to confirm that the meeting is being prepared, however, declare an interest in the dialogue. The organization includes 12 countries: Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Qatar, Libya, United Arab Emirates, Algeria, Nigeria, Ecuador and Angola. The status of observer countries in OPEC are Mexico, Egypt, Oman, and Russia, which participates in the sessions of this organization since 1998.
Oil prices over 40 years