OPEC-Russia oil talks leave key details unresolved
DOHA (Bloomberg) -- OPEC said it made progress toward a deal to cut production by more than 1 MMbpd after another round of oil talks with Russia, but left crucial details including the role of Iraq and Iran to be resolved later this month.
While ministers from Saudi Arabia and Algeria reiterated their goal of reducing the group’s production to 32.5 MMbopd—the most ambitious implementation of the Sept. 28 Algiers agreement—they offered no clear details about how to resolve Iraq and Iran’s resistance to making cuts. Neither did they secure a pledge from Russia to do more than cap production, which is currently at record levels.
"The goal was to prepare for Vienna,” where the Organization of Petroleum Exporting Countries holds talks on Nov. 30, Algerian Energy Minister Noureddine Boutarfa told reporters after talks in Doha. “We won’t turn back on the decision made in September in Algeria. All the countries, 11 present in today’s meeting, agreed to support the Algiers accord."
Members of OPEC are “all hands on deck” to reach an agreement by the group’s Nov. 30 meeting, Secretary-General Mohammed Barkindo said in an interview in Marrakech, Morocco, on Nov. 15. While Libya, Nigeria and Iran have been granted special considerations within the Algiers deal, Saudi Arabia is insisting that other members equitably share the burden of production cuts. Iraq, which didn’t send a minister to Doha, has sought an exemption from any supply curbs.
Proposed Cut
"The meeting in my view was very positive, very constructive,” Russian Energy Minister Alexander Novak told reporters in Doha after talks with OPEC representatives including Saudi Minister of Energy and Industry Khalid Al-Falih. “Our position is very consistent, we are ready to join the OPEC deal and ready to limit our oil production at a certain level."
Russia is considering a proposal from OPEC that it should cut its production, Novak said. The country hasn’t changed its preference for a production freeze rather than cut, the ministry’s press service said by phone. The nation pumped 11.2 MMbpd last month, a post-Soviet record, according to government data.
Algeria is more confident and optimistic of getting a result on Nov. 30, said Boutarfa. A committee was proposed to monitor special considerations within the Algiers deal for three members—Iran, Nigeria and Libya—that are still restoring output from previous disruptions, he said.
Iraq Compromise
Iran has insisted it won’t accept any limits on its production until it has returned to the pre-sanctions level of about 4 MMbopd. In Libya and Nigeria, output is recovering after violence and militant attacks disrupted oil infrastructure. Iraq has also sought an exemption from joining any production cuts, arguing that its fight against Islamic State justifies special treatment.
“We discussed how to agree on all the figures and information, and God willing the decision will be positive in the end,” Boutarfa said. “Iraq should be part of the compromise, Iraq is part of OPEC.”
Iran is considering a proposal to freeze its oil production near the 3.9 MMbopd level the country says it pumps, rather than OPEC’s estimate of about 3.7 MMbopd, an OPEC delegate said this week, asking not to be identified because the information is private. Iraq is mulling a cut, but only from the Oil Ministry’s own level of about 4.8 MMbpd, not the 4.6 MMbpd OPEC says it pumps, the person said.
Saudi Minister Al-Falih declined to speak to reporters in Doha Friday. In an interview with Saudi-owned Al Arabiya television broadcast Thursday, he said he’s optimistic the Algiers accord will be implemented and will speed up the price recovery.
