Saudi Arabian Energy Minister Khalid al-Falih discussed with his Venezuelan and Kazakh counterparts the possible extension of the global oil supply cut pact beyond March 2018, the Saudi energy ministry said.
OPEC and other producers, including Russia, have agreed to reduce output by about 1.8 million barrels per day until next March in a bid to reduce global oil inventories and support oil prices. A further extension for at least three more months beyond March is now being discussed before OPEC meets again in November.
The deal to curb output propelled crude prices above $58 a barrel in January but they have since slipped back to a $50 to $54 range as the effort to drain global inventories has taken longer than expected.
“Both countries agreed that the option to extend the voluntary market rebalancing effort, beyond the first quarter of 2018, would be considered in due course as market fundamentals may dictate,” the ministry said in a statement on Falih’s meeting with Kazakh Energy Minister Kanat Bozumbayev.
Non-OPEC Kazakhstan is aiming for a stand-alone deal with OPEC on restraining its crude production due to a need to crank up output at its Kashagan field, a Kazakh official said last week.
The Central Asian nation increased oil and gas condensate output by 9.9 percent in January-July to 1.724 million bpd, exceeding its quota of 1.7 million bpd under the cut pact. Kazakhstan has said it needs to adjust the terms of the deal as it expects to boost output later this year thanks to the giant Kashagan field.
The Saudi Energy Ministry said that Bozumbayev, who met with Falih on Sunday, said that despite the gradual ramp up of the Kashagan field this year, “Kazakhstan was able, through reducing production in other fields in August, to achieve more than full conformity” with its output cut target.
“A similar production level is also anticipated for September,” the Saudi ministry said. Both ministers agreed to continue, and expand, their energy cooperation, including in two major projects in Kazakhstan in petrochemicals and renewable energy, the ministry said in the statement without providing details.
Falih, who has held his meetings in Astana, also met Venezuelan Oil Minister Eulogio Del Pino and both ministers “agreed on the importance of leaving all options open” including the possible extension of the oil output cuts beyond the first quarter of 2018, if needed, according to a separate statement.
Del Pino on Friday said global oil inventories remain too high and urged producers to look at exemptions granted to countries such as Libya and Nigeria and the effect of those exemptions on the market.
Both ministers discussed oil market developments and how the OPEC-led pact “is improving market stability, contributing to the rebalancing of supply and demand, and drawing down excessive inventories,” the Saudi ministry said.
“They both shared an optimistic outlook on market fundamentals in 2018.”