Oman ready for conditional oil output cut says H E Aufi

2/27/2016 2:48:22 PM

(MENAFN- Muscat Daily) Muscat-

Oman is ready to cut its oil production by five to ten per cent on the condition that every other producer agrees to do the same H E Salim al Aufi Undersecretary of the Ministry of Oil & Gas said.

'We will not cut production unilaterally' he said while speaking to reporters on the sidelines of Oman Society for Petroleum Services' (OPAL) Oil & Gas Forum 2016 on Thursday.

Last week Minister of Oil & Gas H E Mohammed al Rumhi said OPEC and non-OPEC oil producers need to cut output by five to ten per cent to stabilise the market.

H E Rumhi who was a featured speaker at the IHS CERAWeek conference in Houston US said on Tuesday that the sultanate is ready to cut output by 100000 barrels per day or about a tenth of its output as part of any deal.

'It is for OPEC to get everyone together to agree to a cut as an acceptable strategy; agree to a percentage; and then put in place some sort of policing mechanism to ensure that it is happening' H E Aufi said.

When asked whether Oman will participate in an output-freeze plan as was recently agreed between Saudi Arabia Russia Qatar and Venezuela H E Aufi said 'It won't be difficult for us because the agreement sets the production peg at January levels. We averaged a record 1mn-plus barrels per day in January. Moreover we cannot hope to meet these levels continuously on a monthly basis.'

'I think it [the output-freeze deal] is a good start. But what will really turn the market around is a serious reduction [in output]' he added.

H E Aufi said Oman can maintain its 2016 production forecast [of around 985000 barrels per day] even with oil hovering around US$30 per barrel.

'We are doing quite well [in terms of production] and are ahead of the curve on target levels. If this price level continues into 2017 or so then we may start to face some issues. We are still in good shape in terms of production this year' he said.

Speaking at a panel discussion at the OPAL forum H E Aufi said that oil prices have seen resistance around US$25-30 per barrel in the last two months.

'Every time prices go down to that level we are seeing a gradual bounce back. Of course it is not sustainable at this level in the long-term. We know that. Certainly shale oil cannot sustain at this price North America and Canada can not sustain these prices North Sea oil can not sustain these prices and Russian oil can not sustain these prices.'

'There are not many oil producers who can survive comfortably at US$30 or US$40 per barrel. It is just a matter of time before prices to rebound. I do not see it staying low for too long; but again how long is too long I have no idea' H E Aufi said.

The government will proceed with the privatisation of Oman Oil Refineries and Petroleum Industries Co (Orpic) once the company's current projects are completed and they start to generate dividends.

On whether the IPO will involve the holding company or its subsidiaries H E Aufi said 'It has to be the holding group because its subsidiaries are all integrated.'

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