Shaikh Hamad Bin Zayed Al Nahyan
Shaikh Hamad Bin Zayed Al Nahyan, Chairman of the Abu Dhabi Crown Prince’s Court; Dr Sultan Ahmad Al Jaber and Khalid Al Falih tour various pavilions following the opening of the Adipec 2018 exhibition and conference in Abu Dhabi on Monday. Image Credit: Abdul Rahman/Gulf News

Abu Dhabi: The world’s largest energy producer Saudi Arabia on Monday said there is a need to reduce oil supplies by one million barrels per day in 2019 to balance oil markets.

“The technical analysis from Opec secretariat as well as data from EIA, IEA tells us that there is a need for the reduction of supplies approaching one million barrels from October levels,” said Saudi energy minister Khalid Al Falih while speaking at Abu Dhabi International Petroleum Exhibition and Conference (Adipec).

“The consensus among all members is that we need to do whatever it takes to balance the market. If that means trimming supplies by a million, we will.”

Oil prices rose following the comments from Saudi energy minister on Monday. Brent, the global benchmark was up by 0.97 per cent to trade at $70.86 (Dh260) per barrel at around 3:43pm UAE time.

1m bpd

is how much Saudi Arabia plans to cut oil output in 2019 to balance markets

Saudi Arabia already announced that they would be cutting supplies by half a million barrels per day in December when compared to November levels due to less demand.

Al Falih said market overreacted to recent developments in oil markets including disruptions in places like Libya, Canada and the announcement of sanctions on Iran.

“These factors created anxiety in the market.”

He also said Saudi Arabia does not cut supplies arbitrarily and they speak to customers before taking a decision.

“In December as volumes came plentifully from Saudi Arabia, from UAE from Russia and other countries, demand in December declined by half a million barrels per day compared to November.”

In similar comments, Suhail Al Mazroui, UAE Minister of Energy and Industry said Opec is rethinking their strategy in the next meeting in Vienna to rebalance oil markets. He also said that the group will not add extra oil to the market that could lead to oversupply concerns.

“The next meeting requires rethinking of strategies and fundamentals … are there. Saudi Arabia and other producers are having plans to ensure supply of oil for the future. We are not going to oversupply if the market does not require,” he said.

He also said market requires changes in the strategy and they are currently looking at the data to come to a decision on rebalancing oil markets.

“We need to create a market condition that is win-win for producers and consumers.”

Dr Sultan Ahmad Al Jaber, UAE Minister of State and chief executive officer of Adnoc in his keynote speech said the strategic oil and gas announcements, made recently by Abu Dhabi’s Supreme Petroleum Council (SPC), will see Adnoc increase its oil production capacity to 4 million barrels per day (mbpd) by 2020 — and to 5mbpd by 2030 — to meet growing global demand. In addition, Adnoc will develop its vast untapped gas resources.

“As we set out to meet these ambitious goals, we will access our undeveloped reservoirs, tap into our gas caps and further capitalise on our sour gas. Today, we are able to make this happen by thinking outside the box, leveraging technology and reframing our business model,” he said.

“This has finally unlocked the commercial formula that will enable the UAE to attain self-sufficiency and transition to becoming a potential net exporter of natural gas.”

“For the first time, we will jointly develop our unconventional fields in a concession partnership with Total. In addition, our strategy will ensure we remain a reliable supplier of LNG well into the future.”