OPEC, Russia have gap to close before reaching any production-freeze deal - Mr Bouterfa
Mr Nourredine Bouterfa, Algeria’s oil minister, said that there was still a chance a deal could be sealed this week when the Organization of the Petroleum Exporting Countries meets on the sidelines of a conference here. But Mr. Bouterfa, one of the biggest advocates of new limits on OPEC production, acknowledged that the meeting may produce only “the elements of an agreement.”
Mr Bouterfa said that “We can’t come out empty-handed,” adding that oil prices could drop from $45 a barrel today back into the $30s if OPEC fails to come to terms this week.
Mr Bouterfa’s comments Sunday signaled that even if OPEC fails to reach a deal this week, the 14-nation cartel will continue talking about curbing production this fall as it heads into its next official meeting in Vienna on Nov. 30. OPEC Secretary General Mohammad Barkindo said a week ago that the meeting was for consultations only, not for a decision. He later clarified that the cartel could reach a deal later if a consensus emerged.
Delegates in the cartel have said the Algiers meeting is aimed at starting discussions they hope will lead to an agreement at the formal OPEC meeting in Vienna.
OPEC, whose members control more than one-third of the world’s petroleum production, and other big oil producers have been struggling to respond to historically low oil prices. The slump was caused by a boom in U.S. production from shale formations. OPEC’s de facto leader, Saudi Arabia, has responded with record levels of output of its own instead of its traditional tool of production cuts.
In an interview, Nigeria’s oil minister, Emmanuel Ibe Kachikwu, said he supported a production freeze but said Saudi Arabia had “very strong” reasons for increasing its output. With U.S. producers able to raise output quickly when prices rise, “even if we have a freeze, what difference does it make?.”
He said that “Someone will just move in and take over that market share. Whether at the end of the day the freeze itself will be sufficient to impact the market in a way that we expect is also still questionable.”
Mr Kachikwu said his country couldn’t freeze its production now because Niger Delta militants have sabotaged its pipelines, lowering output. He said Nigeria would have to be exempted if there were a freeze.
Source : Wall Street Journal