OPEC wants dialogue with US oil producers

Oil cartel wants to establish dialogue with US shale companies, seeks to find common balance

OPEC wants dialogue with US oil producers

World Bulletin / News Desk

OPEC wants to dialogue with U.S. oil producers, regarding the low prices and the current situation of the global oil market, OPEC Secretary General Abdalla Salem El-Badri said Monday.

Speaking at the IHS CERAWeek Conference here, El-Badri said he has had talks with the European Union, Russia, China and many other countries regarding plummeting prices, but hasn’t been able to talk to U.S. shale oil producers.

"Shale oil members are suffering [from low oil prices] ... what I want is a dialogue," he said. Increased shale production from the U.S. in recent years is regarded as one of the major factors behind the glut of supply in the market and the decline in prices, which has fallen around 70 percent since mid-2014 to around $30 per barrel.

"I don't know how we are going to live together with shale oil. We watched them closely for years. But we need to find a balance between us," he said, adding, "In oil industry, no one can advise the U.S. or [oil producers in] Texas. They know their business."

El-Badri hopes oil prices will rebound before 2017, but was not optimistic.

"We have around 300 million barrels of overhang. This must be reduced somehow. But this should not only be done by OPEC. OPEC is ready to cooperate," he said.

The oil market was accustomed to high prices that hovered above $100 a barrel for years, he said, but things changed.

"As high prices did not stay, low prices won't last too. This is a cycle, which is a result of the [glut of] supply problem."

Fatih Birol, executive director of the International Energy Agency (IEA), said at the same conference that he expects prices to recover to $80 per barrel around 2020.

"In the last five years, global oil supply rose 11 million barrels per day (mbpd), half of it came from shale oil. But this year, we see a decline of 600,000 barrels a day in shale oil and another 200,000 barrels per day next year," he said.

But Birol believes that when prices increase in 2017 when the market rebalances, as per IEA forecasts, shale oil production in the U.S. would again rise.

The most worrisome aspect of the low price environment is a cut in future oil investments, Birol said.

"In 2015, oil investments declined by 24 percent. This year, an additional 17 percent is expected to fall ... we see historical cuts in investments ... low investment due to low oil prices is not good for oil security," he said.

“When there is no investment, there is no supply coming to the market" in the long-term. OPEC's secretary general also talked about the recent decision by Venezuela, Saudi Arabia, Qatar and Russia to freeze their individual production at January 11 levels.

"The freeze is just the first step. If it is successful, we may take other steps in the future. After three or four months we will review it, if there is a positive response from the market," El-Badri said.

Asked about when he expects oil prices to recover, El-Badri injected humor into the discussion. "If I knew oil prices' future, I would quit OPEC tomorrow," he said. 

Güncelleme Tarihi: 23 Şubat 2016, 09:02