Business | Oil & Gas
Adnoc set to cut crude supplies
State-owned Abu Dhabi National Oil Company (Adnoc) has told customers in information released by the Emirates News Agency (WAM) that it will cut their allocations by 19 per cent from August following its decision to reduce production at four fields - Murban, Upper Zakum, Lower Zakum and Umm Shaif.
- By Himendra Mohan Kumar, Staff Reporter
- Published: 23:16 June 29, 2009
Abu Dhabi: State-owned Abu Dhabi National Oil Company (Adnoc) has told customers in information released by the Emirates News Agency (WAM) that it will cut their allocations by 19 per cent from August following its decision to reduce production at four fields - Murban, Upper Zakum, Lower Zakum and Umm Shaif.
Adnoc's move is aimed at complying with the UAE's production quota set by the Organisation of Petroleum Exporting Countries (Opec), WAM said.
A spokesman for Adnoc declined to comment when contacted by Gulf News.
"The UAE appears to be in over-compliance with the Opec production quotas. Cutting back on output means the UAE will be producing less oil for sale temporarily which allows another Arab producer to temporarily produce more than the quota allows in a give and take system typical of any well-run supply cartel," Dalton Garis, Associate Professor for Economics at the Petroleum Institute in Abu Dhabi told Gulf News. "The second reason could be that the UAE is using petroleum sales to help balance the capital supply in the financial system."
Last year, Opec agreed to reduce production by a total of 4.2 million barrels per day (bpd) in a series of meetings it held in September, October and December.
It maintained the production quotas of its members in its meeting last May in a step to help the global economy recover from the financial meltdown.
The UAE's oil output remained unchanged in May for a third month at 2.25 million bpd, according to the latest data released by the International Energy Agency (IEA).
The IEA said the UAE's sustainable oil production capacity is 2.85 million bpd, while its spare capacity for May is 600,000 bpd.
The official selling price of Abu Dhabi's crude oil grades averaged $59.49 (Dh218.3) a barrel in May, down 52.06 per cent from an average $124.10 a barrel in the same month a year earlier. The official selling price of Adnoc's most popular crude grade, Murban, in May was $60.15 a barrel. Its other crude grade, Lower Zakum, was priced at $60.10 a barrel, followed by Umm Shaif at $59.60 a barrel and Upper Zakum at $58.10 a barrel.
On July 11, oil prices touched an all-time high of $147.27 a barrel. However, they went into a freefall during the third quarter last year due to the onset of the global financial crisis.
As economies contracted, the demand for petroleum products waned in top consumer countries, mainly the US, which is the world's largest importer of crude oil. An increase in oil inventories worldwide also contributed to lower oil prices.
Crude oil futures for Aug-ust 2009 delivery in the US were trading yesterday at $69.78 a barrel on the New York Mercantile Exchange in early trade.
International oil prices have more than doubled since plunging below $33 a barrel in December, an indication that consumption is gradually picking up and the worst phase of the global financial crisis may have passed.
Dubai (Bloomberg) Mena Infrastructure Fund, a buyout fund sponsored by HSBC Holdings Plc, Waha Capital PJSC and Dubai International Capital LLC, acquired a 32.8 per cent stake in Oman's United Power Co. for $26.5 million (Dh97.2 million) from GDF Suez.
The acquisition followed an auction after Oman's power regulator asked GDF to sell its stake, HSBC said in an e-mailed statement from Dubai yesterday. Mena Infrastructure, a $500 million investment fund, becomes the largest shareholder in United Power, its second investment after it bought a stake in Egypt's Alexandria International Container Terminals in 2008.
United Power owns and operates a 270 megawatt power station in Oman, the statement said. The plant, located 180 kilometres southwest of Muscat, has been operational since 1996.
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