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Saudi, Algerian oil ministers to push for output deal

By Reuters - Sep 08,2016 - Last updated at Sep 08,2016

ALGIERS — Algeria’s energy minister will meet his Saudi counterpart and OPEC’s secretary-general in Paris on Friday as part of moves towards clinching a global deal on stabilising crude output to support oil prices, an Algerian official and OPEC sources said.

Algeria will host the informal meeting with Saudi Energy Minister Khalid Al Falih and OPEC’s Mohammed Barkindo, said the Algerian official, who asked not to be identified.

A source at the Organisation of the Petroleum Exporting Countries confirmed the meeting as part of a push for an output deal, with producers battered by a glut-induced halving of oil prices over the past two years.

“There is a strong move towards a deal between OPEC and non-OPEC to at least freeze production,” the source told Reuters.

“It seems we are going in this direction. But if we are going to freeze, we have to use secondary sources to gauge production levels. We can’t allow each country to use a different method,” the source said.

“Iran must agree to be in line with other producers and use secondary sources.”

Tehran says it supports any measures to stabilise the market. However, it has stopped short of indicating whether it would join a global deal before its production reaches 4 million barrels per day (bpd), the level at which it says it was pumping before the imposition of Western sanctions in 2012.

The sanctions ended in January this year.

Iran has been the main factor preventing an output deal between OPEC and non-OPEC Russia as Tehran has said it should be excluded from any such agreement before its production recovers.

The OPEC source said Iran’s production before sanctions had never exceeded 3.75 million bpd according to secondary sources, which include consultants and industry media that estimate output independently.

Iran has said it is producing slightly more than 3.8 million bpd. It signalled on Tuesday it was prepared to work with Saudi Arabia and Russia to prop up prices, although Tehran has begun to bargain with OPEC on possible exemptions from any output cap.

The OPEC source said major oil producers were trying to convince Tehran to come onboard, adding there was an initial understanding that only Libya could be offered an exemption.

“Now there is a push to smooth things out and solve any problem,” the OPEC source said, adding there had been no agreement yet on any level at which to freeze production.

“This will be discussed in Algeria,” the source said.

Algeria is hosting meetings of the International Energy Forum and OPEC on September 26-28. Energy Minister Noureddine Bouterfa travelled to Moscow on Thursday, following recent trips to Qatar and Iran.

 

OPEC and Russia are expected to revive talks for a global deal on production in Algeria. A similar initiative failed in April after Saudi Arabia insisted Iran join the pact.

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