Saudi Arabia rules out cutting oil production
Date
2/23/2016 6:48:26 PM
(MENAFN- The Journal Of Turkish Weekly) >Saudi Arabia's Minister of Petroleum and Mineral Resources said Tuesday that the kingdom would not cut its oil production.
Although it joined with Venezuela Qatar and Russia last week to freeze individual output levels Saudi Arabia is adamant about continuing production at the collectively agreed Jan. 11 level.
"There is no need to waste our time with cutting production. That will not happen" Ali Al-Naimi said while speaking at the IHS Energy CERAWeek conference in Houston.
"The 'freeze' gave the market some hope. But we are not banking on cuts. Among producers there is less trust than normal" he said.
At a time of high oil prices in the mid 1980s Saudi Arabia significantly lowered production.
But its share of the global market was reduced by new oil producing countries. This time the kingdom does not want to carry the burden by itself.
"Inefficient and uneconomic producers have to get out" Al-Naimi said.
A boom in U.S. shale oil production in the past five years did not come as a shock to Al-Naimi.
"The surprise was how long the price was steady since 2009. That made shale oil Arctic oil and all difficult-to-produce oil economical" he said while emphasizing that Saudi Arabia "has not declared war on shale" nor on any oil producing country or company.
"We are happy to see the U.S. producers can freely export crude oil. We are seeking the best possible outcome in a highly competitive market" he said.
He remained hopeful that the global oil demand will increase in the long-term and the market will rebalance.
Since OPEC's biaanual meeting in November 2014 Saudi Arabia has refused to trim its production.
"Oil market is much bigger than OPEC and there has been no appetite to share the burden" he explained.
Iran and Iraq two of the cartel’s the largest producers have so far remained silent about agreeing to freeze output levels.
Al-Naimi said he hopes additional countries will agree to freeze their outputs when the group holds meetings next month.
He concluded by saying Saudi oil company Aramco has not cut any programs because of low prices.
"We are spending money to sustain our maximum capacity" he said.
The kingdom's oil production in January was close to its all-time record-high levels.
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