Abu Dhabi: The UAE has ruled out any cut in oil output to stabilise oil prices, and placed the onus to cut production on the countries which are producing the most expensive oil.
“Everyone needs to make measures but those who are producing the most expensive oil, rationale and rules of the market say they should be the first to pull or reduce the production. They are supposed to be the swing producers. If the price is right for them to produce ... let them produce. If the price is not right, they will not produce,” Suhail Mohammad Al Mazrouei, Minister of Energy, said at the sixth Gulf Intelligence Energy Forum in Abu Dhabi on Tuesday.
He said the Organisation of the Petroleum Exporting Countries (Opec) will not hold an emergency meeting to take stock of the situation. “The decision was to leave the market to stabilise itself. The market will need more time. Most probably we are going to wait until our meeting in June. Let’s not jump to conclusions.”
The decision not to cut output during Opec meeting in November was correct, he said. “If we had taken a decision to reduce oil production, we would have regretted today because we will not see an impact. We left the market to stabilise itself. It is good for the world economy, it is good for China. It will drive growth.”
On $70 a barrel price for the market, Mazrouei said no one in this region can dictate or interested to dictate that price anymore. “We are open economies and we are working with great economies like China and others as responsible producers. Who is going to dictate the price is the lowest responsible producer. No one can tell what the price is.”
When asked about whether the new battleground is Asia due to increased demand and more customers, he said Asia is important but people should not forget Africa too. “There is a huge investment in the continent from China and India. In the long run, Africa will be there.”
The energy minister said the world needs shale oil producers to continue operating and a fair price would allow them to do so. “The shale oil producers are very important for the market supply, and we all need them to stay,” he said.
“So if that is the case, since they are producing almost 4 million (barrels per day) today, I think whatever price that makes shale oil continue to be produced is going to be the fair price for the conventional producers to produce, so whether 60 or 70 or 80, whatever the figure is — that is where the market will stabilise.”
Speaking about oilfield services companies incurring losses due to drop in prices he said this is an opportunity for everyone to optimise their spending. “I don’t want to talk about casualties. I think it is the nature of the game.”
According to him, it is hard to predict oil prices and the first half of 2015 will give more data to predict what will happen.
