Tehran downplays chances of oil deal, UAE ‘keen’ on freeze – Kuwait’s oil minister arrives in Algiers for IEF, OPEC meetings

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ALGIERS, Sept 26, (Agencies): Kuwait’s Deputy Prime Minister, Minister of Finance and Acting Oil Minister Anas Al-Saleh arrived in Algeria on Monday to partake in the 15th International Energy Forum (IEF15), due on Tuesday.

Al-Saleh, who heads Kuwait’s delegation to the meeting, is also expected to attend a meeting of the Organization of the Petroleum Exporting Countries (OPEC) member nations.

Upon arrival, he was welcomed by Algerian Minister of Energy Nourelddin Butarfa and Kuwait’s Ambassador to the North African nation Mohammad Al-Shabu.

“I am glad to participate in the IEF15 and OPEC meetings as we look to concert our views towards further progress and development in the oil market,” Al-Saleh told KUNA.

He also noted that a joint Kuwaiti-Algerian ministerial committee will convene to go over opportunities of cooperation and investment between both nations.

Iran downplayed on Monday the chances of OPEC and non-OPEC oil producers clinching an output-restraint deal in Algeria this week even though several other members of the group said they still hoped for steps to tackle a price-eroding glut of crude.

Oil prices have more than halved from 2014 levels due to oversupply, prompting OPEC producers and rival Russia to seek a market rebalancing that would boost revenues from oil exports and help their crippled budgets.

The predominant idea since early 2016 among producers has been to agree to freeze output levels, although market watchers have said such a move would fail to reduce unwanted barrels.

Sources told Reuters last week that Saudi Arabia had offered to reduce its output if Iran agreed to freeze production, a shift in Riyadh’s position as the kingdom had previously refused to discuss output cuts.

As delegations gathered in Algiers, Iranian Oil Minister Bijan Zanganeh said expectations should be modest.

“This is an advisory meeting and that’s all we should expect from it,” he was quoted as saying by oil ministry news service SHANA before he left Tehran. “The talks among OPEC members can be used for the OPEC summit in Vienna in November.”

Crude prices rose by 3.5 percent on Monday, recouping most of the losses sustained on Friday, when hopes for an output deal in Algeria faded.

One OPEC delegate said the focus was now firmly on trying to persuade Iran to freeze output at levels acceptable for the rest of the producer group.

Iran’s output has been stagnant at 3.6 million barrels per day (bpd) in the past three months, close to what the country produced before the imposition of European sanctions in 2012.

The sanctions were eased in January 2016, and Iran has said it wants to achieve output of more than 4 million bpd.

On Monday, an OPEC source said Iran was still insisting on being allowed to reach 4.1-4.2 million bpd before freezing production.

Some ministers and officials expressed hope that a deal could emerge this week. “For us in the UAE, we are for a decision. We think a freeze will help if it is agreed. We hope that all are going to agree,” the United Arab Emirates’ energy minister, Suhail bin Mohammed al-Mazroui, told Reuters.

Algerian Energy Minister Noureddine Bouterfa said everyone in the Organization of the Petroleum Exporting Countries agreed that the market was badly oversupplied and the situation had worsened since the last OPEC meeting in June.

“Credible and significant action is needed to help the market rebalance  … One fundamental aspect is that OPEC production should be significantly below the level of August. The second is that the effort must be shared out.”

“Third is that any agreement be limited to the time it takes to reabsorb oil stocks. And the fourth is that the action should be credible in the eyes of the market and verifiable,” Bouterfa told French-language Algerian daily Liberte.

Members of OPEC will meet on the sidelines of the International Energy Forum, which groups producers and consumers, from Sept 26-28.

Russia is also attending but there is no evidence the country is preparing to participate in any production action.

Meanwhile, as Russian energy minister Alexander Novak flies to Algeria this week for talks with OPEC on output cuts, developments at home indicate non-OPEC Russia is not preparing for any coordinated production action.

Five leading Russian oil companies, responsible for three quarters of output in the world’s largest producer, all say they will be boosting output next year after reaching record levels in recent months.

No doubt, all these companies would obey if President Vladimir Putin ordered them to curtail production.

But so far Putin has had no meeting with leading Russian oil producers — state-owned or private — and even the energy ministry has yet to hold such consultations to sort out details and logistics of any output action.

“We think that it is impossible to agree … No one trusts anyone, everyone has been just ramping up production (within OPEC and outside),” a source at Russia’s leading oil producer, Rosneft, said.

Kremlin-controlled Rosneft, which accounts for over a third of Russian production, has been the biggest opponent of the global oil freeze deal since it was first discussed at the beginning of the year.

Rosneft’s influential chief, Igor Sechin, a close ally of Putin, has said internal differences were killing OPEC and its ability to influence the market.

The Rosneft source said the firm’s position has not changed despite the latest developments, which even saw Putin meeting Saudi Deputy Crown Prince Mohammad bin Salman in China in early September and the country’s ministries agreeing to work together to help stabilise oil markets.

Days after the pact was signed Russia reported a new post-Soviet production record of over 11 million barrels per day.

The Russian oil landscape is also dominated by No.2 firm, private Lukoil, private producer Surgut, state-owned GazpromNeft and Tatneft.

The companies plan to raise production by around 1.6 percent on average in 2017, according to their forecasts and Reuters calculations as they benefit from a weaker rouble and cheaper costs at home.

The jump in production comes not only thanks to conventional oil deposits but also as Kremlin oil champions Rosneft and GazpromNeft are increasing output of hard-to-extract oil, despite Western sanctions on Russian shale projects.

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