Abu Dhabi: UAE energy minister Suhail Al Mazroui on Tuesday said that the oil output cut agreement to rebalance markets is working perfectly, with high conformity levels recorded among participating countries.
Speaking at the Global Financial Markets Forum in Abu Dhabi, Al Mazroui said Organisation of Petroleum Exporting Countries (Opec) and non-Opec member countries achieved conformity and compliance levels of 107 per cent last year, with 122 per cent in November, 129 per cent in December and 133 per cent in January.
“We started with lots of doubts and speculation whether this group will work together but we achieved more than expectations with high conformity levels and compliance. This group will stick together and they are committed to [balancing] the market.”
Opec and non-Opec members being led by Russia are restraining production by about 1.8 million barrels per day to prop up prices under a deal that is set to expire at the end of 2018. Opec members are cutting production by about 1.2 million barrels per day.
He also said that the industry needs trillion of dollars of investment to meet the growing demand for oil in future.
“It’s not enough that only GCC countries are investing and continue to invest in this important sector. We would need to see major investments coming back to the market. We require many NOCs [national oil companies] and IOCs [international oil companies] to invest,” he said, adding that Saudi Aramco, the Abu Dhabi National Oil Company (Adnoc) and Kuwait have already announced their plans of investment.
Adnoc is investing almost $109 billion (Dh400.35 billion) in the next four years throughout the value chain and Saudi Aramco is also planning new investments in the next three years.
Kuwait is also expected to invest $112 billion to boost oil and gas production in the next five years as it targets 4 million barrels per day by 2020.
“We would need $10.5 trillion to invest to ensure that [we] meet the world demand for oil. We need oil at a reasonable price and without that we will see that many markets will also suffer.”
The UAE energy minister also expressed optimism that they will achieve market balance in terms of demand and supply in 2018.
