No tolerance on oil sector disruption – Price steadies

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KUWAIT CITY, April 18, (Agencies): The Cabinet on Monday warned again that there would be no tolerance with those who deliberately disrupt work at vital facilities or cause damage or loss to state interests. The warning was made during the Cabinet’s weekly meeting held at Bayan Palace and chaired by His Highness the Prime Minister Sheikh Jaber Al-Mubarak Al-Hamad Al-Sabah, said Minister of State for Cabinet Affairs Sheikh Mohammad Abdullah Al-Mubarak Al-Sabah.

And part of following up the open strike called for by the Oil and Petrochemical Industries Workers Confederation, which took effect Sunday morning, the ministers were offered a detailed explanation on the efforts by the Kuwait Petroleum Corporation (KPC) and affiliate companies to handle the situation. An account was offered by Deputy Prime Minister and Minister of Finance and Acting Oil Minister Anas Khalid Al-Saleh and a team from the KPC and the affiliated Kuwait National Petroleum Company (KNPC) and Kuwait Oil Company (KOC).

The efforts mainly focused on activating a contingency plan to honor KPC’s commitments, providing fuel for the stations of the Ministry of Electricity and Water, and oil products for the local and global markets.

The Cabinet lauded the efforts, the national role played by workers in oil fields and refineries, and the “spirit of responsibility” manifested by retired ones and volunteers who offered to work and fill in the gap, Sheikh Mohammad Abdullah said.

Meanwhile, the team reviewed the legal steps and procedures the KPC and subsidiaries are taking in line with their regulations, against strike inciters and those who caused damage to the potentials and public funds, for maintaining state interests.

The Public Authority for Manpower (PAM) has forwarded a letter to the Cabinet on the need to take legal procedures against Kuwait Oil Workers Union for organizing the protest action on Sunday, reports Al-Anba daily. Speaking to the daily, Minister of Social Affairs and Labor Hind Al-Subaih confirmed that legal action will be taken once the Cabinet issues an official statement about the strike. She revealed the legal measures include dissolution of the union and referral of those who caused enormous losses to the Public Prosecution.

On the other hand, Chairman of the union Eng Salem Al-Ajmi confirmed that high-level talks are underway to reach an agreement between the two parties – the protesters and the government. In his statement to the daily, Al-Ajmi asserted, “We are optimistic that we will quickly find a solution to the crisis in order to guarantee equality among workers in the sector through the wisdom of HH the Prime Minister Sheikh Jaber Al- Mubarak.”

Meanwhile, oil prices steadied on Monday after a Kuwaiti workers’ strike that slashed more than half the country’s oil output offset worries about a scuttled major producers’ freeze plan that sent the market tumbling earlier.

The strike cut more than 60 percent Kuwait’s crude output, lending support to price benchmarks such as Brent and Dubai, and tightened refined product supplies as the country scales back refinery runs and fuel exports. Brent had tumbled as much as 7 percent earlier on Monday after oil major producers from the Organization of the Petroleum Exporting Countries and non- OPEC Russia failed to reach agreement on a plan to freeze output.

The producers had gathered in Qatar, Doha at the weekend for what was expected to be the rubber-stamping of a deal to stabilise output at January levels until October. The deal crumbled when OPEC heavyweight Saudi Arabia demanded Iran join the plan, despite Tehran’s repeated assertions it would not. “The material loss in production from the Kuwait strike has helped the oil market forget about the farce from Doha,” said Matt Smith, director of commodity research at the New York-headquartered Clipperdata. Data from market intelligence firm Genscape showed crude inventories at the Cushing, Oklahoma delivery point for US crude futures’ West Texas Intermediate (WTI) benchmark falling nearly 860,000 barrels for the week to April 15, traders who saw the data said. Brent was down 15 cents, or 0.4 percent, at $42.95 a barrel by 12:06 pm EDT (1606 GMT). It had fallen $3 earlier in the session. WTI was off 55 cents, or 1.3 percent, at $39.81 a barrel, after sliding to $37.61 at the day’s low.

Brent’s premium versus WTI was at its widest in nearly two months. While fallout from the Doha plan could weigh on the nascent recovery in oil, the market may not tumble as much as it did earlier this year, when Brent hit 12-year lows of around $27 in late January. “Gradually declining non-OPEC production as well as planned maintenance in the face of resilient oil demand in Q1 have recently pointed to improving oil fundamentals,” Goldman Sachs said in a note, referring to the first quarter.

A weakening US dollar and the mostly steady climb in global equities since February was supportive to oil too, traders said. “While a few forecasters may be dusting off some old $20 WTI expectations as a result of the Doha outcome, we expect solid support in nearby WTI at the $35 mark,” Jim Ritterbusch at Chicago oil consultancy Ritterbusch & Associates said.

The oil sector’s spokesman Sheikh Talal Al-Khaled Al-Sabah said on Monday the production rates of the three refineries of Kuwait National Petroleum Company (KNPC) are compatible with the contingency plan, reassuring that local supplies of petrol and derivatives are completely provided. Sheikh Talal said in a press release that there are positive developments in the management of Kuwait Petroleum Corporation (KPC) subsidiaries’ operations on the second day of the oil workers’ strike. He added that the increase in oil and gas production is enough for reaching normal rates gradually.

Sheikh Talal said the Kuwait Oil Company (KOC) has re-operated two production facilities in north and south Kuwait, thus boosting crude and gas production rates. He added that the outcomes of the contingency plan carried out by the KPC to address the workers’ strike is greatly working out, speaking highly of the practical steps taken by the KPC’s international marketing sector.

Production rates at Al-Shuaiba and Umm Al-Aish factories of the Kuwait Oil Tanker Company (KOTC) are very normal, he said, pointing to full commitment to meeting people’s gas needs. The KPC’s response blueprint, mainly exchanging inter-company experts and workers, and using the help of technicians and workers from the Ministry of Electricity and Water has largely contributed to containing the strike-bearing crisis, he remarked. KPC subsidiaries are working fervently to honor the country’s oil commitments and to safeguard its reputation both at home and abroad, the oil sector’s spokesman said. Sheikh Talal thanked all volunteers who are playing a great role in overcoming the current crisis in an initiative that reflects a great sense of responsibility and patriotism. Oil sector laborers started Sunday a strike in protest against proposed austerity measures on the background of the sharp drop in oil prices.

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